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2021-01-01

Decision of the Board of Directors of the Authority No. (62) for 2021

The Financial Regulatory Authority (FRA) issued Decision No. 62 of 2021 to establish mandatory eligibility criteria for private insurance funds seeking regulatory approval to participate in investment fund companies. The decision mandates that qualifying funds maintain over EGP 100 million in invested capital, appoint a licensed full-time investment manager, secure an actuarial surplus covering the participation value, and ensure their total stake does not exceed 5% of their own funds or 25% of the target company's capital, whichever is lower. Furthermore, it requires compliance with established corporate governance rules, limits investments in the target company's issued documents to 20%, and stipulates that board members must have clean records for the past five years, with all provisions taking effect upon publication in the Egyptian Gazette.

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Financial Regulatory Authority Egypt

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FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision of the Board of Directors of the Authority No. (62) for 2021 dated 27/4/2021 Regarding the Regulations on the Participation of Private Insurance Funds in Investment Fund Companies

Board of Directors of the Financial Regulatory Authority

After reviewing the Private Insurance Funds Law issued by Law No. (54) of 1975 and its executive regulations; and the Capital Market Law issued by Law No. (95) of 1992 and its executive regulations; and Law No. (10) of 2009 regulating supervision over markets and non-banking financial instruments; and Decision of the Board of Directors of the Authority No. (51) of 2014 regarding the conditions required for founders of an investment fund company; and Decision of the Board of Directors of the Authority No. (101) of 2015 regarding the rules and regulations for corporate governance of private insurance funds; and after the approval of the Board of Directors in its session held on 27/4/2021.

Has Decided

(Article One)

The following conditions must be met to obtain the Authority's approval for the participation of private insurance funds in investment fund companies:

  1. The private insurance fund must be registered with the Authority.
  2. The invested capital of the private insurance fund must exceed EGP 100 million in its latest financial statement, and it must have appointed a full-time investment manager licensed by the Authority, in accordance with Article (14 bis 1) of the executive regulations of the Private Insurance Funds Law.
  3. Preparation of a financial and economic feasibility study regarding the participation in an investment fund company, which must include all data necessary for conducting the activity, including a statement of the shareholders and senior management structure of the investment fund company.
  4. Existence of an actuarial surplus determined by the fund's actuary on the participation date, which must not be less than the value of the participation in the investment fund company.

Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35370530 Fax: +202 35370036 WWW.FRA.GOV.EG

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FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

  1. The participation of the private insurance fund in an investment fund company must not exceed (5%) of the total funds of the private insurance fund or (25%) of the share capital of the investment fund company, whichever is lower.
  2. The proportion of the private insurance fund's investment in documents issued by its participating investment fund company must not exceed (20%) of the private insurance fund's funds.
  3. The board of directors of the private insurance fund must include at least two members with expertise in investment or insurance fields.
  4. The private insurance fund must comply with the rules and regulations for corporate governance of private insurance funds issued by Decision of the Board of Directors of the Authority No. (101) of 2015.
  5. No final judgments imposing felony or misdemeanor penalties for crimes involving honor, integrity, or one of the crimes stipulated in the Private Insurance Funds Law must have been issued against the fund's board members within the preceding five years, unless their reputation has been restored.
  6. No administrative measures or penalties must have been taken against the private insurance fund, unless the reasons for such penalty have been removed and six months have elapsed since then.

(Article Two)

The Authority's approval must be obtained when the private insurance fund wishes to increase its participation ratio in an investment fund company, taking into account the provisions of this decision.

(Article Three)

This decision shall be published in the Egyptian Gazette and on the Authority's website, and it shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors of the Authority Dr. Mohamed Omran

Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35370530 Fax: +202 35370036 WWW.FRA.GOV.EG

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