Egyptian Exchange: Clarification Regarding The Separate Trading Of The Rights’ Issue

n light of having listing and trading of rights’ issues separately from the company’s shares in the near future, EGX would like to clarify some points in this regard as the trading of rights’ issues separately is considered a financial instrument related to a specific stock during the subscription period for the capital increase of this stock.

Worth mentioning that allowing listing and trading of rights’ issues separately from the company’s stocks during the subscription period for the company’s capital increase is considered an advantage to shareholders. It allows the shareholder who is not willing to subscribe in the rights’ issue to sell that right with a market value equivalent theoretically to a difference between the stock price adjusted with the rights’ issue & the stock price not adjusted with the rights’ issue.

On the other hand, EGX has set some measures to protect investors’ rights as follows:

1. The rights’ issue is listed separately based on the company’s request and the decision of the concerned authority and after the announcement in the capital increase prospectus. The rights’ issue is traded in a separate market.

2. The open price of the rights’ issue is the difference between the last close price of the stock adjusted with the rights’ issue and the theoretical price of the stock not adjusted with the rights’ issue.

3. The percentage of the price limits on the rights’ issue is associated with the price limits on the related stock, however, the amount of price movement of the rights’ issue may differ from the amount of price movement of the related stock. The price limits on the separate rights’ issue are calculated as follows:

[(The price limit on the stock x the theoretical price of the separate rights’ issue) + (The price limit of the stock x the subscription price of the stocks of the capital increase)] / The theoretical price of the separate rights’ issue

4. The value that determines the close price of the stock that is not adjusted with the rights’ issue, is calculated as a proportion between the theoretical price of the stock not adjusted with the rights’ issue and the last close price of the stock adjusted with the rights’ issue multiplied by the value required to change the close price, which is calculated according to the following formula:

(The theoretical price of the stock not adjusted with the rights’ issue x the value determines the close price adjusted with the rights’ issue) / Last close price of the stock adjusted with the rights’ issue.

5. The value determines the close price of the rights’ issue separately is calculated as a proportion between the theoretical price of the rights’ issue separately and the last close price of the stock adjusted with the rights’ issue multiplied by the value required to change the close price as per the following formula:

(The theoretical price of the rights’ issue x the value determines the close price adjusted with rights’ issue) / The last close price of the stock adjusted with the rights’ issue.