Cairo and Alexandria Stock Exchange (CASE)- A successful case of governance reform

In July 2002, new listing rules went into effect at the Cairo and Alexandria Stock Exchange (CASE), which increased disclosure and corporate governance requirements for quoted firms. As a result, a large number of companies, Mainly small or closely held ones, were delisted for failing  to observe the new stock exchange rules.

Being listed allowed a company to benefit from a tax shield, so that companies even closed or family owned ones, tried to get quoted in order to benefit from this discount. To have reliable companies listed without affecting the market capitalization, three steps were found to be necessary:

1.    Implement new listing rules with strict disclosure requirements;

2.      Set new annual listing fees; and

3.      Cancel the tax shield for listed companies.

At the end of 2000, there were 1200 listed companies with a market capital of US$13billion. In March 2005, following the reform, the number of listed companies decreased to 766 listed companies with a new market capital of US$52 Billion.

Stock Exchange executives and board members of the 10 largest listed companies have formed a Corporate Governance Committee to consider developing an Egyptian Code of Corporate Governance on the role, duties and functions of the board.

To learn more about CASE story, see the World Bank REPORT ON THE OBSERVANCE OF STANDARDS AND CODES (ROSC), Corporate Governance Country Assessment EGYPT, March 2004 http://www.worldbank.org/ifa/rosc_cg_egyp2.pdf