Where the shareholders’ authority ends and the board’s begins

On paper, shareholders sit at the top of the corporate hierarchy, wielding their authority through the general assembly. In practice, power doesn’t always flow the way the org chart suggests, at least not for those short of a majority. May alone saw three major boardroom disputes test the tension between formal shareholder supremacy and a board’s powers — all three were instigated by the minority side. A significant minority bloc at the Egyptian Resorts Company (ERC) exhausted every legal channel to unseat a sitting board and failed, while Baladna’s 16% stake in Juhayna failed to buy it a board seat. Meanwhile, two co-founding brothers at Misr Italia — the only unlisted company in this piece — deadlocked over control until a negotiated buyout was the only way out.

The architecture of power

The Companies Law (pdf) grants shareholders — collectively, through the general assembly — exclusive authority over some of the business’s most consequential decisions, including capital structure changes, auditor appointments, related-party transaction approvals, and extraordinary resolutions. To carry them out, they elect a board of directors to act on their behalf between meetings. The board accumulates institutional continuity and operational knowledge. But the shareholder base, especially a diffuse one, is harder to mobilize — that’s why an individual shareholder’s formal ranking above the board doesn’t automatically translate into leverage.

“In practice, some companies, especially those without an absolute majority, rely more on the policies and decisions of the board,” Islam Saeed, Founding Partner of Alphalex Legal and Tax Firm, tells EnterpriseAM. “The general meeting’s role becomes mainly two things: board elections from time to time, and the annual meeting.”

The exception is concentrated ownership structures, such as a single dominant shareholder or shareholders organized into blocks — think private equity. In those cases, formal authority and effective control are largely the same thing — the controlling block directs the assembly, the assembly elects a sympathetic board, and the board runs the company accordingly. None of the three May disputes involve that kind of shareholder, which is exactly why each had to be resolved the hard way.

Beneath the Companies Law sit executive regulations that fill in procedural detail, and beneath those, the company’s articles of association — mostly a General Authority for Investment and Free Zones (Gafi) template that listed companies can customize within narrow limits. “Currently, it is still very conventional compared to other jurisdictions,” Saeed says. Layered on top are Financial Regulatory Authority (FRA) and Gafi corporate governance rules and minority protection guidelines. Adhering to all of it can “significantly minimize or even eliminate disputes over procedural matters,” leaving only the substantive ones, Saeed argues.

Formal power, effective control

Board members can disnesent, but they can’t veto. A single member of an EGX-listed company’s board can disagree and document it but cannot block a decision that has enough votes behind it, nor go to a regulator to reverse it unilaterally. “While any board member technically has the right to object, if a legally valid approval is reached without them, and as long as the procedures were executed carefully, lawfully, and in compliance, they do not have the right to obstruct the matter or turn to any authority to reverse it,” Saeed explains. Collectively, the board has more room: members who think a decision goes against the company’s interests can ask the chairman to escalate to the general assembly, or take concerns to Gafi or the FRA if they hit a wall internally. But majority still rules.

Shareholders operate on a different track. Their first stop is the general assembly: a shareholder who believes the company has acted improperly can formally notify the chairman and demand the issue be addressed. Investors holding certain ownership thresholds (typically 5% to 10%) can call a meeting themselves or force items onto an annual general meeting (AGM) agenda. Only after those internal channels have been exhausted can the dispute move outside the company — and even then, shareholders must prove legal standing and a direct interest in the outcome.

Wearing two hats changes the math. A board member who also holds equity has two separate tracks available at once, Saeed says. That dual standing matters in a dispute: they have direct visibility into board decisions as they’re made, can object on the record in real time, and can simultaneously mobilize their shareholder rights to force the matter to the general assembly.

Shareholders overplay

ERC is the clearest illustration of the escalation ladder hitting its ceiling. A minority bloc holding 24.95% of ERC ran through every available channel after failing to unseat the sitting board at a September 2025 general assembly — four court petitions, four rejections. They turned to Gafi, which called a new board election. The Administrative Court blocked it in four days, finding Gafi had no legal basis to intervene.

The rapid response was unusual. “Expecting a standard judicial response within days for regular corporate disputes is unrealistic,” Saeed tells us, arguing that what made ERC different was irreversibility. For a judge to grant an urgent interim motion, two conditions must be met — immediate necessity and a strong prima facie legal justification, Saeed says. ERC cleared both bars: installing a new board, once done, would have been nearly impossible to undo, and Gafi had failed to follow the correct statutory sequence. The general assembly’s decision was never really in question here — the real question was whether a regulator could reopen a fight the bloc had already lost in court.

Juhayna makes a different point — a stake doesn’t automatically mean a seat. Baladna, the Qatari dairy company, has been upping its stake in Juhayna since 2022 to around 16% — the second-largest on the cap table. However, the Companies Law bars a candidate involved in a competing business from standing for the board without explicit general assembly approval, and that bar applies regardless of ownership size. “The shareholders evaluate whether the state of conflict is manageable under certain restrictions or completely unmanageable,” Saeed says. A controlling shareholder can override the bar through the assembly, but a minority shareholder cannot. And in Juhayna’s case, the assembly hadn’t granted it, and the Cairo Economic Court upheld the exclusion.

When the law runs out of road

The two co-founding brothers of Misr Italia deadlocked over control of one of Egypt’s largest unlisted real estate developers until no legal mechanism could produce a resolution either side would accept. “A dispute usually boils down to one party being legally in the right and the other in the wrong,” Saeed says — but when the split is close enough that neither side can establish that cleanly, the market finds its own way. Gafi’s Investors Disputes Settlement Center brokered the exit: Khaled El Assal bought his brother Hani’s 49.9% stake for EGP 1.42 bn and walked away with full ownership.

The pattern underneath

Taken together, the three cases suggest minority shareholders’ leverage is situational, depending on the type of dispute and type of company. In the case of ERC, shareholders had regulatory and judicial avenues to challenge the board, albeit with clear limits. In Juhayna’s case, a statutory threshold trumped the size of the stake. For Misr Italia, with no institutional channel to fall back on, the dispute ultimately came down to a negotiated exit.

What’s next

A pending overhaul could reshape this terrain. Proposed amendments to the CompaniesLaw, approved by a joint Senate committee last month, would strip boards of one of their sturdiest procedural levers: the ability to stall a general assembly simply by not meeting quorum. Under the current law, an assembly can’t validly convene without a minimum number of board members present — a threshold some boards have used to delay or dodge shareholder scrutiny. If passed, assemblies could proceed and exercise full powers once shareholder quorum is met, with absent directors facing fines instead. The package still needs a full Senate vote and House approval before reaching the president’s desk, with no timeline yet for the executive regulations that would fill in the details.