Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Economic Committee of HoR Approves Amendments to Public Business Sector Companies Law

Tue 12 May 2020 | 07:18 PM
Ahmed Moamar

The Economic Affairs Committee of the House of Representatives (HoR), chaired by Deputy Ahmed Samir, announced during its meeting today, Tuesday, the final approval of the draft law submitted by the government to amend some provisions of the Law 203 of Public Business Sector Companies Law issued in of 1991.

Dr. Hisham Tawfik, Minister of Public Business Sector attended the committee sitting held today.

The committee will prepare its report on the draft law to be presented to the plenary sitting held later.

The explanatory note emphasized that the draft law supports the principles of corporate governance, the importance of developing disclosure and transparency rules, and the need to qualify state-owned companies to use non-bank financing tools to fund their activities and productive assets.

So, those companies can obtain the financing they need for their activity or expand it at an appropriate cost away from dependence on the state budget.

Those amendments support the continuation of the activity of public business sector companies according to economic principles that maximize the rights of the state from its ownership of these companies.

The newly drafted amendments also suggest alternatives to reconsider the repeated loses by those companies, liquidate them or merge them with other economic entities without prejudice against rights of the workers of these companies.

On the other hand, Dr.  Tawfik said that the state is conducting a comprehensive development process for the public sector companies, in order to stem losses and turn them into gains in the future after completing the huge reconstruction process. The plan is now taking place after spending many billions of pounds to be implemented.

He added, during his speech to the Economic Affairs Committee at the House of Representatives (HoR) headed by Ahmed Samir, yesterday, that his ministry and the Prime Ministers will discuss the draft law to amend some provisions of the Law No. 203 Public Business Sector Companies issued in 1991.

He stressed that the establishment of any new company, affiliated with the public sector, will not be allowed until a feasibility study has been drawn up to show the extent of its economic importance to make sure that it really serves one of the state's sectors.

The minister explained that during the fiscal year 2017/2018, the number of losing companies reached 48 ones.

Assets of those companies amount for EGP 16 billion pounds in addition to EGP44 billion of debt. These companies were allowed to continue their losses over many years although they do not have the ability to pay these debts until now.

The minister revealed that the debt of some companies has reached billions, pointing out that the new legislation set a new mechanism for dealing with losing companies by presenting the matter to shareholders.

In the event of losing half of the capital, the shareholders have two options, the first one linked to pump new funds to the company, not to leave debts accumulating. The second option means the shareholders should take a decision to liquidate the losing company or merge it with another company.

The minister added that the government won't establish new companies to be losing in the future, emphasizing that the amendments of the Law of the Business Sector aimed at activating competition between the public and private sectors.

The minister explained that the amendment gives more freedom to the public sector to compete with the private sector and tackle a large squeeze.