The Egyptian stock market will slash the number of companies on the exchange by more than 25 per cent by the end of 2008, completing its campaign to delist rule-breaking businesses.

The Cairo & Alexandria Stock Exchanges (Case) wants to delist about 100 of the 373 companies quoted on the bourse, in the final stage of its three-year campaign to ensure that only professionally managed businesses are listed.

“By the close of the year, we will have a really proper port-folio,” says Maged Shawky, chairman of the Case.

Since 2006, when the Egyptian exchange introduced a new cor-porate governance rulebook, it has delisted more than 800 companies for failing to abide by the rules.

“Mostly they are delisted for failing in their commitment to quarterly disclosure of financial statements,” says Shawky. “The other problem is that they are not traded.”

The Case 30 index of Egypt’s 30 largest listed companies has performed well in recent years and is more than seven times higher than it was four years ago.

The exchange delisted 27 companies in the first week of May, its most recent monthly clear-out. Since the beginning of 2008, more than 70 companies have been removed from the exchange.

Some have taken the Case to court in an attempt to rejoin the stock market, a move dismissed by Shawky. “They have no legal basis going to court,” he says.

As older firms have left the bourse, they have been replaced by new companies in a wave of initial public offerings (IPOs) of shares.

Businesses such as Maridive, an offshore oil exploration company, and real estate developer Palm Hills Development listed on the Case at the beginning of May.

Although the number of IPOs is smaller than the number of companies leaving the exchange, the new companies are much larger.

“We delisted £E20bn ($3.7bn) over the past six to seven months and they have been offset by new companies with a cap of £E40bn,” says Shawky.

The Case wants to improve corporate governance at the professionally managed companies that account for the bulk of the £E850bn worth of shares listed on the exchange.

The stock exchange’s vice chairman, Mohamed Omran, will introduce a regulation in late May requiring all companies to explain any failure to abide by the 2006 corporate governance rulebook in their annual reports (MEED 28:4:08).

The rulebook requires companies to appoint non-executive directors to the majority of positions on their boards. It also insists that companies only use independent external auditors to verify their accounts.

“The exchange will not continue to perform so well forever,” says Shawky. “There is definitely a point in time when we will have a correction, but I do not know when it will be.”