[Last updated: 1 January 2025, unless otherwise noted]

2.1 Main legal framework

The main rules and principles of Egyptian law relating to public tender offers can be found in the Capital Markets Law 95 of 1992 ("Capital Markets Law") and its executive regulations ("CML Regulations").

The main body of the Egyptian tender offer legislation is based on the Capital Markets Law, the CML Regulations and the Egyptian Stock Exchange Listing Rules, together with its implementation directions. The legislation is aimed at harmonizing the rules on public tender offers for public companies. A company is considered to be a public company if it is either:

1. listed on the Egyptian stock exchange ("EGX"); or
2. a delisted company whose shares are still publicly offered. For these purposes, "publicly offered" means a company that (i) is incorporated or (ii) has had its capital increased, based on a subscription prospectus certified by the FRA.

2.2 Miscellaneous rules and principles

The aforementioned legislation applies to public companies and contains the main legal framework for public tender offers in Egypt. Within this legislation, there are a number of rules and principles that are to be taken into account when preparing or conducting a public tender offer, such as:

1. The rules relating to the disclosure of significant shareholdings in listed companies. These rules are embodied in the Egyptian Stock Exchange Listing Rules on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (see 3.4); and
2. The rules relating to insider dealing and market manipulation (the so-called market abuse rules). These rules are based on chapter 11 of the executive regulations of the Capital Markets Law (see 6.2).

2.3 Supervision and enforcement by the Financial Regulatory Authority

Public tender offers are subject to the supervision and control of the FRA. The FRA is the principal securities regulator in Egypt.

The FRA has a number of legal tools that it can use to supervise and enforce compliance with the public tender offer rules, including administrative fines. In addition, criminal penalties could be imposed by the courts in cases of non-compliance.

The FRA also has the power, in certain cases, to grant exemptions from the rules that would otherwise apply to a public tender offer.

2.4 Foreign investments

As a general rule, foreign investments are not restricted in Egypt. However, certain activities conducted in Egypt by foreigners are subject to reporting requirements or prior approvals from certain competent authorities in Egypt. As an exception to the general rule, foreign ownership is strictly prohibited in activities such as: commercial agency, ownership of properties and investments in the Sinai Peninsula, desert land and agricultural land (as described in more detail below). A brief summary of key restrictions and prior approvals in major sectors in Egypt is outlined below:

1. Banking sector
   • There is an obligation on any natural or legal person (whether Egyptian or foreign), who owns more than 5% but less than 10% of the capital of a bank, to notify the Central Bank of Egypt within 15 days from the date of acquisition.
   • Further, any natural or legal person (whether Egyptian or foreign) is not allowed to own more than 10% of the bank's capital or any percentage which leads to the actual domination of it except with the prior approval of the board of directors of the Central Bank of Egypt.
2. Insurance sector
   • There is an obligation on a natural or legal person who owns 5% of the capital of any insurance or reinsurance company to notify the FRA within two weeks from the date of acquisition of such percentage.
   • According to the amended Insurance Law No. 155 of 2024 (“IL”), increasing ownership of a shareholder by 5% or its multiples requires prior approval of the FRA. In addition, the prior approval of the board of directors of the FRA is required at various ownership thresholds (10%, 25%, 33.333%, 50%, 66.666%, 75% and 90%), and an application with supporting documentation must be submitted at least 60 business days in advance. Acquisition of 25% or more requires, in addition to the standard documentation, specifying the objectives of ownership/control, submitting a business plan including directions as to management and if the Financial Institution is a foreign entity, it must provide evidence that it is subject to the supervision of a regulator in its jurisdiction similar to the FRA or CBE.
   • If the acquirer controls 10% or more of the relevant insurance market, FRA prior approval must be obtained (this is a separate approval).
   • The IL provides under article 168 (paragraph 5) that if the applicant requesting ownership in an insurance company is a foreign insurance company or a foreign financial institution, it must provide evidence that it is subject to the supervision of a regulator in its jurisdiction similar to the FRA or CBE.
   • In addition, the IL sets out in article 155 the requirements for incorporating insurance companies, which include (amongst other things) a requirement for such entities to obtain their regulator’s prior approval to work in Egypt by applying the concept of collective authority. Although such approval mainly applies for incorporation of new insurance companies, as a practical matter the FRA may also request such approval to be granted in the case of an acquisition of an insurance business in Egypt by a foreign company.
3. Commercial agency activities
   • Foreign investors are not permitted to engage in commercial agency activities. Such activities are reserved for Egyptian nationals.
4. Ownership of properties in the Sinai Peninsula
   • is of paramount importance to note that foreigners are strictly prohibited from owning properties and investing in the Sinai Peninsula. Exceptions were made to some regions (i.e. Sharm El Sheikh, Dahab and the Gulf of Aqaba) provided that prior approval is obtained from the competent regulatory authorities in Egypt.
5. Ownership of desert land
   • The ownership of a desert lands is limited to Egyptian nationals only unless a presidential decree is granted to foreign investors to own the relevant land.
6. Ownership of agricultural land
   • The ownership of agricultural lands is reserved for Egyptian nationals only.
7. Ownership of non-banking activities companies:
   • There is an obligation on a natural or legal person who owns 5% or more (but less than 10%) of the capital or voting rights of any of the said companies to notify the FRA within two weeks from the date of acquisition of such percentage.
   • Prior approval must be granted by the FRA in the case of an acquisition by a natural or legal person exceeding 10% of the company's capital or in the case of ownership of such person increasing to 5% and its multiples with respect to the capital or voting rights of said companies.

There are certain other sectors that require prior regulatory approvals in Egypt, whether for foreign or local investors, such as healthcare, pharmaceuticals and TMT (amongst others). Accordingly, legal analysis on regulatory approvals in each sector must be undertaken in advance to establish what approvals might be required. Separately, Law No.3 of 2005 regulates anti-trust notifications and approvals that may be required in the context of an acquisition in Egypt.

2.5 General principles

The following general principles apply to public tender offers in Egypt. These rules are based on the Capital Markets Law, the CML Regulations and the Egyptian Stock Exchange Listing Rules:

1. all holders of the securities of an offeree company of the same class must be afforded equivalent treatment. Moreover, if a person acquires control of a company, the other holders of securities must be protected;
2. the holders of the securities of an offeree company must have sufficient time and information to enable them to reach a properly informed decision on the tender offer. Where it advises the holders of securities, the board of the offeree company may give its views on the effects of implementation of the tender offer;
3. the board of an offeree company must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the tender offer;
4. false markets must not be created in the securities of the offeree company, the offeror company or any other company concerned by the tender offer in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted;
5. an offeror must only announce a tender offer after ensuring that they can fulfil any cash consideration in full, if such is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration; and
6. an offeree company must not be hindered in the conduct of its affairs for longer than is reasonable by a tender offer for its securities.

2.6 Taxes on securities transactions

A tax shall be imposed on all securities transactions whether Egyptian or foreign, listed on the stock exchange or not, and no costs shall be deducted. The buyer and the seller shall bear the burden of this tax.

Tax is charged on capital gains from trading in securities listed on the Egyptian Exchange. However, this provision was suspended for two years starting on 17 May 2015, and then extended for another three years to 16 May 2020. Since then, as at the time of writing, the government has not provided any formal update on this. However, a new amendment has been introduced to the income tax law in this regard and said amendment applies 10% tax on the capital gains of the listed companies.