May 11th, 2023 Legal Updates

Corporate Governance of Non-banking Financial Companies in Egypt

In Egypt, the General Authority for Investment and Free Zones (“GAFI”) and the Financial Regulatory Authority (“FRA”) are taking significant steps to establish and improve Corporate Governance (“CG”) regulations to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of companies and to enhance a better and smooth relationship between the board of directors, company’s shareholders, and related parties. Both regulators have issued guidelines and regulations aimed at promoting good CG practices since 2003. Recognizing the importance of CG practices for companies, we will provide a series of articles that will cover most significant laws and decrees governing CG in Egypt.


As the non-banking financial (“NBF”) sector is a fast-growing and promising market in Egypt, this article sheds light on CG regulations applied on companies carrying out NBF activities in Egypt (“NBF Companies”).

By virtue of Decree No. 100 of 2020 issued on June 23, 2020 (as amended), FRA issued a unified CG code applicable on NBF Companies (the “Code”). The Code revokes other FRA decrees previously issued for certain fields in the NBF sector, collected CG rules, updated them and unified them in one code. The objective is to unify the binding regulatory framework of CG applied on all NBF Companies.    

The Key CG matters covered by the Code include the following:

Board of directors:

The Code includes several requirements related to the composition of the board of directors (“BOD”) and its appointment.

  • Composition. In brief, (i) the majority of the BOD should be non-executive members; (ii) half of the non-executive BOD shall be independent; the BOD chairman should be separated from the position of the managing director and/or the chief executive officer in the same company as well as companies operating in the field of securities unless there are reason(s) to justify it and provided that such reasons are fully disclosed to the FRA; the women representation in the BOD shall be not less than (25%) of the BOD members or at least two female members.
  • Appointment. NBF Companies should adopt the cumulative voting scheme while electing board members, to ensure minority representation in the BOD through the application of propionate representation, if feasible.
  • The BOD of NBF Companies is required to form a number of sub-committees whose members may include the BOD’s members namely: (i) Audit Committee; (ii) Risk Committee; and (iii) Governance Committee. Both the Audit and Risk committees are mandatory to be established. The Audit Committee may assume its role as well as the role of the Governance Committee. The BOD is entitled to form additional committees when necessary (i.e. Compliance, Recommendation and Incentive and Information Technology committees etc…).
  • The Code determines each committee’s role, structure and regulations. Such committees shall be composed of non-executive and independent members; the majority of the members and the chairman of the Audit committee shall be independent members.
Transparency and disclosure obligations:

For transparency purposes, the FRA obliges the NBF Companies to disclose certain information/events. Such issues/information include but not limited to:

  • Material events that may affect the company’s activity or relevant parties, in particular:
    1.  the inability or cessation of the company to fulfill its debts or financial obligations before third parties;
    2.  changes that lead to breaching any of the financial standards that the company shall comply with,
    3.  filing a bankruptcy lawsuit or administrative seizure against the company,
    4. any circumstances that may occur and weaken the company’s ability to protect the rights of its clients);
  • The structure of the shareholders owning 5% or more of the company’s share capital, BOD composition and main employees, along with the updated extract of the commercial register. These reports shall be provided to FRA during January of each calendar year;
  •  Any change in the composition of the BOD or the board committees, immediately upon its occurrence.
  • The general assembly and BOD meeting minutes, within 10 days for its convening; and
  • The annual financial statements, annual performance report and audit report along with the BOD report, at least 21 days before convening the general assembly meeting.

Other key take aways include, inter alia:

  • Digitalisation of meetings’ convocation. As of the COVID-19 outbreak, the FRA has allowed the BOD and shareholders’ meetings (whether ordinary or extraordinary) to be convened electronically via modern telecommunication means (audio or video are admissible). The Code is also authorizing the management of NBF Companies to use new technological means for the shareholders and board meetings, provided that the management of NBF Companies should put in place effective means for shareholders, managers, members of the BOD to vote, as the case may be.
  • External Auditor. NBF Companies must appoint an FRA-approved auditor for a maximum period of six years. After this period, the company must replace the auditor with an individual who does not have professional connections with the previous auditor.
  • Insider Trading. Pursuant to the Code and without prejudice to any other applicable laws, individuals considered insiders (i.e., chairman, board members, officers, managers and employees of the NBF Companies) are prohibited from dealing in the shares of NBF Company or its affiliated companies (including holding companies) based on information which was availed to such persons as insiders.
  • Confidentiality. The said individuals are also prohibited to disclose any confidential information or related to the company’s clients unless required by regulators or concerned persons.


  • While the Code does not expressly stipulate a specific penalty for violating its provisions, from a practical standpoint, the FRA may hinder the ratification of minutes until the relevant NBF Company rectifies its status. Further, given that NBF Companies are mainly governed by Egyptian Capital Market Law No. 95 of 1995 (“CML”), we are of the view that the general penalties of violating the CML, its Executive Regulation and FRA’s decrees may apply.


In conclusion, the CG practices are becoming increasingly important for companies, and FRA has advanced a long way towards improving CG and is taking significant steps to establish and improve these practices in Egypt. Such CG practices and regulations play an immanent role to protect the interests of all stakeholders.

Authors: Hegui Taha, Partner, Maha El-Meihy, Legal Director, and Habib Wahdan, Associate.

For further information, please contact: Alex Saleh at or Hegui Taha at