May 2012

More Transparency in Government Procurement: Online Publication of Award Decisions of Government Tenders

The Prime Minister has issued decree no. 463 for the year 2012 (“the Decree”), regulating electronic publishing of government tenders results. The Decree requires all public entities to publish the decisions related to the evaluation results of financial and technical bids on the website: (www.etenders.gov.eg/en/). The Decree applies to all governmental entities and authorities with exception of national security and defense authorities. The website is available in both Arabic and English languages.

In 2010, the Prime Minister issued a similar decree in relation to the publication of requests for proposals of public tenders on the same website.

Sharkawy & Sarhanwelcomes this step which increases the level of transparency in governmental procurement and shows the government determination to continue improving in this respect. Yet, at this early stage of implementation, we do not recommend relying exclusively on this website for obtaining information regarding government tenders

The Egyptian procurement laws do not include any provisions that promote the computerization of the public procurement process or using electronic means of communication between public entities and bidders (i.e. submitting bids electronically/ eProcurement). This is expected to be an area of improvement which the government will be working on.

New Rules for Acquisitions made by Egyptian Listed Companies:

The board of the Egyptian Financial Supervisory Authority (EFSA) has recently introduced an amendment to the rules of Securities’ Listing, Continuance of Listing and Delisting of the Egyptian Stock Exchange (the “Listing Rules”). The amendment to Article (33) introduces a definition to the term “affiliated companies” which was not defined in the previous rules.

Article (33) of the Listing Rules was amended in November 2010 to require that any listed company that wishes to acquire, either by itself or through its “affiliated companies”, 20% or more of the share capital or voting rights of a non-listed company must submit to the Egyptian Stock Exchange a fair value study prepared by an independent financial advisor for the fair price of the acquisition. According to the recent amendment which was passed by the board of EFSA on 2 May 2012, the term “affiliated companies” was replaced by “subsidiary and sister companies as defined in the Egyptian Accounting Standards”.

France Telecom SA’s Subsidiary Launches Mandatory Purchase Offer to Purchase Egyptian Company for Mobile Services SAE (Mobinil):

The Egyptian Financial Supervisory Authority (EFSA) announced its approval of the mandatory purchase offer presented by MT Telecom SCRL, a France Telecom’s subsidiary, to purchase 100% of the shares of the Egyptian Company for Mobile Services SAE (Mobinil) for a price of EGP 202.5 per share. Orascom Telecom Media and Technology Holding S.A.E will keep 5% of the equity shares of Mobinil.  The total value of the transaction exceeds 3 billion US dollars.

Mobinil appointed HC Securities as its independent financial adviser to evaluate the offer submitted by France Telecom.

FT launched a hostile purchase offer on Mobinil in 2010 for EGP 245 per share. Yet Egyptian courts stopped the offer following a claim brought by Orascom arguing that the offer breached the principle of equality between shareholders and that EFSA did not follow the proper legal procedures while approving FT offer.

Under Egyptian law, any juridical or natural person who acquires or wishes to acquire, by itself or through connected parties, one third or more of the shares of a target company, must submit to the other shareholders a mandatory purchaser offer approved by EFSA for buying all the shares of the target company. A target company for this purpose is a company whose shares are either listed in the Egyptian Stock Exchange or has offered securities to the public.

Egyptjoins the International Renewable Energy Agency:

The People’s Assembly has finally approved the articles of association of the International Renewable Energy Agency (IRENA) which has come into effect in 2009 and signed by 157 countries, 90 of which have ratified the charter.

The IRENA intends to assist developing countries through providing various aids for trainings and technical advice in addition to supporting researches in renewable energy.

Egyptplans to benefit from the new and renewable energy technology introduced in the developed countries, especially in the solar energy sector which is considered one of Egypt’s main natural resources.

In 2008, Egypt approved a strategy to satisfy 20% of its growing demand for electricity from renewable energy sources by 2020. Egypt intends to meet 12% of the demand through wind power, requiring 7,200 MW of wind farms, 2,200 MW of which is to be procured by the New and Renewable Energy Authority and the remaining 5,000 MW to be procured by the private sector.

April 2012

Draft Amendment of Egyptian competition law:

An amendment draft to the Egyptian competition law is on the agenda of the People’s Assembly. The draft proposed the following amendments:

• Market dominance will be deemed to exist automatically if a person has 50% or more of the market share.
• A prior approval from the Regulator must be granted in relation to agreements among competitors on market prices.
• Members of the board of directors of the regulatory body (“the Regulator”) will be chosen by both the government and the People’s Assembly.
• Fines for violation will increase from a minimum of EGP 100,000 up to EGP 300,000,000 to a minimum of EGP 500,000 to EGP 500,000,000 or 20% of the value of sold goods whichever is higher.

An exemption from sanctions to the violating person who first reports the violation and presents evidence to the Regulator is also introduced.

March 2012
Presidential Elections:

Recently, the chairman of the Higher Committee for the Presidential Elections announced the scheduled dates for the presidential elections in the following course:
 

• The submission process of presidential nominations will be for duration of one month commencing on March 10^th until April 8^th, 2012.
• The presidential elections will take place on May 23^rd and May 24^th.
• The run-off between the two leading candidates will take place on June 16^th and June 17^th, if none of the candidates managed to score (50% + 1) in the first round.
• The announcement of presidential elections results will take place on June 21^st, 2012.

The Constitutional Assembly:

A joint meeting was held by the People’s Assembly and the Shura Council to elect a constitutional assembly for drafting the new Egyptian constitution.

The debates around the formation of the Constitutional Assembly settled on forming such assembly from both councils and other individuals who will be chosen from a wide range of different backgrounds and positions to represent all people.

The date of voting for the composition of the Constitutional Assembly is not yet set. According to the constitutional declaration, a period of six months shall be given to both councils to form the Constitutional Assembly. An additional period of six months will be granted to such assembly in order to draft the new Egyptian constitution, which will then be voted for in a public referendum.

However, the SCAF and the Islamic majority in the People's Assembly have indicated before their desire to have a new constitution coming into effect before the results for presidential elections are announced. Therefore, it is possible that the new constitution will be voted for before June 21^st, 2012.