[Last updated: 1 January 2025, unless otherwise noted]
6.1 Inside information
An Egyptian company is obligated to immediately disclose to the public all "inside information" that relates to it, including all material changes in information that has already been disclosed to the public:
- "Inside information" means any material information of a precise nature which has not been made public, relating, directly or indirectly, to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.
- Information shall be deemed to be of a "precise nature" if it indicates a set of circumstances which exists or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to do so, and if it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of financial instruments or related derivative financial instruments.
- "Information which, if it were made public, would be likely to have a significant effect on the prices of financial instruments or related derivative financial instruments" shall mean information a reasonable investor would be likely to use as part of the basis of their investment decisions.
- It is up to the company to determine if certain information qualifies as "inside information". This will often be a difficult exercise, and a large gray area will exist as to whether certain events will need to be disclosed or not.
6.2 Insider dealing and market abuse
The basic legal framework regarding insider dealing and market abuse under Egyptian law is set forth in the Capital Markets Law.
In principle, the rules on insider dealing and market abuse remain applicable before, during and after a public tender offer, albeit that during a tender offer additional disclosures and restrictions apply in relation to trading in listed securities.
6.3 Common anti-tender offer defense mechanisms
During the period from the date that the FRA approves the application for the tender offer until the publication of the results of such offer, the board of directors of the target company is prohibited from taking any anti-tender offer acts which have a material adverse effect on the tender offer, as summarized in the table below.
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Mechanism |
Assessment and considerations |
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1. Capital increase (poison pill) Capital increase by the board (authorized capital). |
The board may not take any decisions for a capital increase or the issuance of bonds if such an increase or issuance, as the case may be, will render the tender offer transaction impossible or difficult, unless such decision was obtained 30 business days before the FRA ratified the tender offer. |
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2. Share buyback Share buyback "with a view to avoid an imminent and serious harm" to the company. |
During the validity of the tender offer, the target company and any of its related parties may not, whether directly or indirectly, purchase securities issued by the target company if such securities constitute a part of the capital or give a right to own a part of the capital However, the target company may buy back shares during the validity of the tender offer if such purchase is in execution of a company's general meeting resolution which was issued on a date earlier than the date on which the FRA ratified the draft of the tender offer and the memorandum of information. |
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3. Frustrating actions Actions such as significant acquisitions, disposals, changes in indebtedness, etc. |
The board of directors of the target company is prohibited from taking any action affecting in a material way the target company, increasing its liabilities or obstructing the development of its activities in the future, unless these actions are in the normal course of business of the target company and on a date before the FRA's ratification on the tender offer and the memorandum of information. |