[Last updated: 1 January 2024, unless otherwise noted]

A foreign issuer must comply with certain corporate governance standards set out in the Listing Rules, Capital Market Law and other applicable laws and decrees, which include public disclosure of certain matters and corporate resolutions, restrictions on insider trading, and complying with certain corporate governance rules addressed in the Listing Rules, such as having an audit committee and a legal representative in Egypt, as well as an investor relations officer (with respect to Egyptian companies) and at least two independent directors.

Audit committee

Under the Listing Rules, any company with shares or EDRs listed on the EGX must have an audit committee that satisfies the requirements of Article 37. This rule generally requires that its members and chairman are elected by virtue of a board decision, and must comprise of at least three non-executive directors, having expertise in the company's line of business/industry. The majority of the members of such committee, including its chairman, must be independent directors. The definition of "independent" is quite broad and extends to include any relation whatsoever with the company, any of its affiliates, parents, or subsidiaries, and any party related to any of the foregoing. It also includes any employment or contractual relationships, or directorship positions, over a span covering three years back. Marital relations and second degree relatives are also among the reasons for disqualification. If the issuer is unable to secure sufficient candidates to fill such positions, it may retain external experts. The audit committee shall present quarterly reports directly to the board of directors of the issuer. Small-medium sized issuers with an issued and paid capital not exceeding EGP100 million (approximately US$3.23 million) may be exempt from forming an audit committee.

The primary functions delegated to the audit committee are to assist the board of directors in fulfilling its supervisory responsibilities in connection with:

• Inspection and review of the internal audit procedures of the issuer.
• Inspection and review of the accounting standards applied in the issuer and any changes resulting from the application of new accounting standards.
• Inspection and review of internal audit procedures, plans and results.
• Inspection of the procedures carried out in preparing and reviewing (i) the annual and periodic financial statements (ii) offerings relating to securities and (iii) estimated budgets, cash flow and income statements.
• Advising on the appointment of auditors, and matters relating to their remuneration and dismissal.
• Advising on permitting the auditors to perform services for the company other than the preparation of the financial statements, and the remuneration in the regard, without prejudice to their independence.
• Inspection and review of the auditor's report regarding the financial statements and discussing the comments included, in addition to working on resolving any misunderstandings between the board of directors and the auditors.
• Ensuring the preparation by an independent financial advisor of a report regarding any related party transactions.
• Ensuring that the issuer adheres to the recommendations of the auditor and the FRA.
• Ensuring the application of the necessary supervisory methods to maintain the issuer's assets, conduct periodic evaluation of administrative procedures and prepare reports to the board of directors.
• The Commission must submit quarterly reports to the Board of Directors of the company. The Commission may be assigned by the Board of Directors to any work it deems to be in the company's interest. The company's board of directors and officials must respond to the Committee's recommendations 15 days from the date of notification. The Chairman of the Committee must notify the Stock Exchange and the Board in the event that there is no response to its recommendations within 60 days.
• SMEs with less than EGP100 million (approximately US$3.23 million) of paid capital are exempt from having an audit committee.