New Fee Brackets for Registration on Egyptian Stock Exchange

In a continuing effort to make investing and building a business in Egypt easier and simpler, Ministerial Decree No. 2125 of the year 2018 was published in the Official Gazette on October 18, 2018. The decree amends the fees charged on companies to register on the Egyptian Stock Exchange.  Article 1 of the new decree divides companies into five brackets based on their capital:

Bracket
Capital (EGP)
Yearly Registration Fee
1
12,500,000 and below
0.2% of capital
2
12,500,000 – 100,000,000
0.15% of capital
3
100,000,000 – 300,000,000
0.075% of capital
4
300,000,000 – 500,000,000
0.005% of capital
5
500,000,000 and above
0.0025% of capital

The fee is imposed upon initial registration or upon the registration of stock dividends within the same financial year.

In general, registering in the stock market has a number of benefits. To start off, registering in the stock market makes companies more approachable and appealing to investors, who will know that the rights and obligations they are owed are laid out clearly. The registered company will hence benefit by being open to a variety of investors, whether they be natural persons or other companies. It also creates a type of marketing for the firm, where it will gain credibility for being listed on the stock exchange. The company can in turn use this to encourage their employees by offering them stocks in the company, increasing their loyalty. Further, this makes actions like mergers and acquisitions easier, as the shares of companies will be listed clearly. In a wider sense, these new regulations benefit the Egyptian Stock Exchange as a whole; breaking down the fees imposed on companies makes registration more realistic and viable, encouraging companies to seize these benefits and in turn benefit the economy.

However, this decree is especially impactful when it comes to small and medium-sized enterprises, which will now have a bigger chance at being able to register. Article 2 of the decree stipulates that SMEs will only be incurred a reduced annual fee of 50% of the fees above. Placing SMEs on the stock exchange will help them grow faster, cultivating their potential for creating jobs and fostering competition. Encouraging SMEs is an important step in a growing economy with a vast labor market.

In conclusion, this change is one of many introduced in 2018, aimed at reviving the Egyptian economy. Most importantly, this change is in line with numerous laws and amendments related to investment, which were recently introduced, fitting into the bigger picture of unstoppable economic growth. The decree is predicted to encourage companies to register on the Egyptian Stock Exchange, ensuring its vitality and maintaining its dynamic.

Our legal and financial professionals at Andersen Tax and Legal can help you register your company on the Egyptian Stock Exchange – contact us for further information on the procedures.


Prepared By

Marina Iskander – Partner

Copyright © 2018 Andersen Tax & Legal Egypt, All rights reserved