The Company’s corporate governing bodies are the General Meeting of Shareholders and the Board of Directors. Each has its own responsibilities in accordance with Egyptian law and the Company’s articles of association. The Board of Directors is an executive body responsible for the Company’s day-to-day operations, and is elected by the Shareholders in a General Meeting.
The General Meeting of Shareholders is the Company’s supreme governing body and is authorized under Egyptian law and the Company’s articles of association to pass resolutions on, among other things, the following issues:
• The election and dismissal of members of the Board of Directors;
• The election and dismissal of the auditor(s);
• Any amendment to the constitutional documents;
• Any increase or reduction of the Company’s share capital;
• Approval of merger, consolidation, recapitalization or other reorganization;
• Approval of the reports prepared by the Board of Directors;
• Approval of the Company’s annual financial statements;
• The setting of remuneration of the Board of Directors, other than the remuneration of the managing directors which can be determined by Board of Directors resolution;
• Participation in litigation against the Board of Directors, including appointment of the Company’s representative for such litigation;
• Approval or rejection of the profit (dividend) distribution proposal prepared by the Board of Directors;
• Approval of any issuance of securities convertible into or exchangeable for share capital in the Company;
• Determination of a date for payment of contribution by the shareholders and requesting its payment;
• Other issues provided by law and the constitutional documents.
The Board of Directors is responsible for the Company’s day-to-day management (with the exception of functions reserved for the General Meeting of Shareholders). The members of the Board of Directors are appointed by the General Meeting of Shareholders for renewable terms of one year, and are also dismissed by a General Meeting. The appointment and the number of members of the Board of Directors is determined by a General Meeting from time to time and shall not be less than three and not more than eleven members. The scope of authority of each member of the Board of Directors is defined by a General Meeting or by the Board of Directors.
The compensation system in place for members of the Board of Directors is subject to approval by the General Meeting of Shareholders for the monthly salary of the managing directors which may be determined by the Board of Directors. Under the remuneration scheme currently in effect, the chairman and the managing directors of the Board of Directors receives a salary and fiscal year-end profit sharing. The members of the Board of Directors, including the executive chairman and the two managing directors, have not previously received remuneration for their positions as directors.
The corporate affairs of the Company are governed by the Egyptian Companies Law, the Egyptian Capital Market Law, the EGX Listing Rules, other laws governing companies incorporated in Egypt and its articles of association. A general attribute of joint stock companies in Egypt is separation of ownership and control. Although shareholders own the Company nominally, the management of the Company is vested, by law in the hands of its Board of Directors. The Company is subject to Egyptian disclosure requirements and is required to submit annual and quarterly financial statements prepared in accordance with EAS; provide notices of any material developments to the EFSA and to the EGX; provide the regulator with minutes of the Company’s Ordinary and Extraordinary General Meeting; and publish the Company’s annual financial statements in two widely circulated local daily newspapers; and publish the Company’s quarterly financial statements on the website of EGX unless the Company is distributing periodic dividends, in which event the quarterly financial statements shall be published in two widely circulated local daily newspapers.
The primary functions delegated by the Board of Directors to the Audit Committee are to assist the Board of Directors in fulfilling its oversight responsibilities in connection with:
• The inspection and review of the Company’s internal audit procedures;
• The inspection and review of the Company’s accounting standards and any changes resulting from the application of new accounting standards;
• The inspection and review of audit plans and results, as well as reviewing the Company’s internal audit reports and supervising the implementation of the Audit Committee’s recommendations;
• The inspection of the preliminary draft of the financial statements prior to their presentation to the Board of Directors and their delivery to the auditor;
• Advising on the appointment of the auditor(s), the determination of their remuneration and considering all matters relating to their dismissal or resignation;
• The inspection of the procedures carried out in preparing and reviewing (i) the annual and periodic financial statements, (ii) public and private offerings relating to securities and related offering circulars and (iii) estimated budgets, cash flow and income statements;
• Advising on the appointment of auditors to perform services other than the preparation of the financial statements and advising on the remuneration in consideration for such services;
•The 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 before being ratified. The Audit Committee shall submit a report at least quarterly to the Board of Directors with its recommendations. The Board of Directors is required to respond to the Audit Committee’s recommendations within fifteen days of receiving notice of such recommendations. If the Board of Directors does not follow the recommendations within sixty days of receiving notice of such recommendations, the chairman of the Audit Committee must notify both the EFSA and EGX.