Family companies are a new path to increasing shares listed on the Egyptian Stock Exchange

The Egyptian Stock Exchange has begun a serious plan to attract companies owned by Egyptian families, which constitute 80% of companies in Egypt, in order to increase the shares offered to investors, which encourages the injection of financial liquidity into the stock exchange.

Several companies expressed their desire to benefit from the advantages offered by the Egyptian Stock Exchange to companies listed on it, which include granting the necessary financing to expand activity, applying governance mechanisms, and re-evaluating the company’s shares in real time, which gives it a real market value.

Challenges of registering family businesses

Family businesses represent 75% of the private sector, but they face several challenges to the continuation of their business due to disputes between the various parties of the family, which requires informing them not only of the existence of amicable settlement and mediation of any disputes that ensure companies continue to provide their services, according to the Executive Director of the Egyptian Center for Arbitration and Settlement. Non-banking financial disputes, Counselor Marian Kaldas.

She said that there must be continuous development of the legislative framework regulating and governing the work of these companies, which contribute significantly to increasing employment rates and supporting the productive capabilities of the national economy.

Vice President of the Egyptian Stock Exchange, Heba Al-Serafi, says that a specialized marketing department was established for the offering on the stock exchange and began addressing all companies, especially the family ones, to reveal the advantages of the offering in an attempt to pump new shares in order to attract new financial liquidity.

She added that investors are looking for new financial mechanisms and tools to pump their money into, and therefore we are now working on launching the real estate stock exchange and the index compatible with Islamic Sharia.

Hedging risks

She pointed out that everyone is now afraid of floating the exchange rate so as not to lose the value of their savings, and then pumping their money into the stock market will achieve their desired goal of achieving high returns commensurate with the current inflation rate.

She explained that investors were able to create wealth from the stock market in light of the historical rise in the main indices, stressing that there are many advantages of registering companies, whether family or joint-stock, pointing out that registration pushes the company to international level.

She confirmed that the Stock Exchange is in the process of completing the promotional plan to encourage companies to register in all governorates, and the promotion plan will begin by going to two governorates initially.

Subtraction culture

The founder and partner of Yes Financial Consulting Office, Advisor Dr. Ali Yassin, believes that the culture of offering on the stock exchange must spread, especially as it provides great liquidity instead of bank borrowing that is accompanied by guarantees that amount to a mortgage, and are packed with interest and delays, which raises the risks for the company in the event of its default. For a reason beyond her control.

He continued: The stock market provides better financial liquidity than loans, and the fear of offering for family companies, which represent 80% of existing companies in Egypt, is pride in inheritance, but companies must understand that offering does not mean giving up ownership, but rather it means introducing new partners in exchange for interests according to their percentage.

Governance procedures

Yassin stated that the financial oversight required companies intending to go public on the stock exchange to implement governance and structure for the company, which is not intended to expropriate or break up ownership, but rather to have rational management in light of the growing demands and global competition to achieve a number of controls by separating ownership and management.

He confirmed that a large number of family companies contacted Maktabah, which provides financial consultations to assist in offering on the stock exchange, and they expressed their desire to begin the procedures in preparation for entering the Egyptian financial market.