Misleading Financial Statements and Board Liability for Inaccurate Information
Misleading financial statements and board liability for inaccurate information raise highly sensitive legal issues for Egyptian companies because financial statements are used not only to present operating results but also by general meetings, shareholders, banks, investors and regulators to assess financial position and make financing, distribution and investment decisions. Risk increases where statements show profits, […]
Forgery of Company Books, Registers and the Information Recorded in Them
Forgery of company books, registers and the information recorded in them poses a direct threat to sound corporate governance and institutional decision-making because company records are relied upon by management, shareholders, statutory auditors, creditors and regulators to verify ownership, attendance, voting, capital and financial information. In companies with foreign investors or international groups, inaccurate records […]
Distribution of Fictitious or Legally Non-Distributable Profits in Egyptian Companies
Fictitious profits or profits that may not legally be distributed are among the most sensitive issues in corporate management because a distribution transfers real funds from the company’s patrimony to shareholders, employees or members of management and may prejudice working capital and creditors where it is based on unrealised profits or violates mandatory distribution rules. […]
Recording Inaccurate Information Concerning Capital Increases or Payment of Share and Quota Values
Inaccurate information concerning capital increases or payment of share and quota values poses a direct risk to the integrity of a company’s financial position, because it may present paid-up capital or a capital increase that is not backed by real funds or assets. The legal characterisation, however, varies depending on the source of the increase […]
Unlawful Invitations to Public Subscription and the Liability of Company Founders and Managers
Inviting the public to subscribe in violation of the law is an offence that directly affects investor protection and the integrity of the capital market. An open invitation to the public to subscribe for shares or financial instruments requires compliance with the issuer’s permissible legal form, approval of offering and disclosure documents by the Financial […]
Fraudulent Overvaluation of In-Kind Contributions Upon Incorporation or Capital Increase
Fraudulent overvaluation of in-kind contributions upon incorporation or a capital increase creates risks beyond a mere disagreement among experts over value, because it may result in stated capital that is not matched by an asset of the declared value, thereby harming the company, shareholders and creditors. Nevertheless, not every high valuation or professional difference of […]
False Statements Concerning Company Capital and Payment of Contributions Upon Incorporation
False statements concerning company capital and payment of contributions upon incorporation are among the most serious irregularities that can affect a company at the formation stage, because they concern the actual capital relied upon by the company, investors and creditors when assessing solvency and the ability to commence business. The legal characterisation, however, varies according […]
False Statements in Share and Securities Offering Prospectuses and Founders’ Liability
False statements in share and securities offering prospectuses are among the most serious forms of misleading conduct in the capital market because investors make subscription or purchase decisions in reliance on information disclosed by the issuer concerning its financial position, intended use of proceeds, risks, management, historical data and future projections. Preparing a subscription or […]
Capital, Financial Statement and Corporate Record Offences in Egypt: Liability of Founders, Management and Auditors
Introduction: When Does an Accounting Irregularity Give Rise to Legal Liability? Irregularities in share capital information or financial statements may arise from an accounting error, a breach of disclosure requirements, or an intentional act involving fraud or forgery. Not every error can properly be characterised as a criminal offence; its legal characterisation depends on the […]
Forged or Invalid Powers of Attorney at General Meetings and Their Effect on Voting
A power of attorney enables a shareholder to participate in general meeting proceedings and exercise voting rights without attending in person. However, forged or invalid powers of attorney at general meetings may affect the quorum and the majority required to adopt resolutions and may give rise to civil or criminal liability where they involve deliberate […]
Liability of the General Meeting Chairperson and Secretary for Preparing the General Meeting Minutes
The liability of the general meeting chairperson and secretary for preparing the general meeting minutes rests on ensuring that the minutes accurately reflect what took place, from attendance and quorum to deliberations, resolutions and voting results. The minutes are an essential record of shareholders’ intentions and a means of completing corporate procedures, but they are […]
General Meeting Resolutions Distributing Profits in Violation of the Law: Liability of the Board and Statutory Auditor
A general meeting resolution distributing profits in violation of the law raises issues extending beyond the validity of the resolution itself to the protection of share capital, liquidity and creditors’ rights, as well as the liability of board members, the statutory auditor and shareholders who received distributions. A general meeting vote does not legitimise fictitious […]
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