Decision of the Board of Directors of the Authority No. (87) of 2015

The General Authority for Financial Supervision Decision of the Board of Directors of the Authority No. 87 of 2015 Dated 11/8/2015 Regarding the Guidelines for the Internal Regulations of Real Estate Financing Companies

The Board of Directors of the General Authority for Financial Supervision, Having reviewed the Joint Stock Companies, Partnerships Limited by Shares and Limited Liability Companies Law issued by Law No. 159 of 1981 and its executive amendments; And Law No. 148 of 2001 on Real Estate Financing, amended by Presidential Decree-Law No. 55 of 2014; And Law No. 10 of 2009 regarding the regulation of supervision over non-Egyptian securities and financial instruments; And Cabinet Resolution No. 1 of 2001 issuing the executive regulations of the Real Estate Financing Law No. 1, and Resolution No. 2 of 2015 amending the executive regulations of the Real Estate Financing Law; And Presidential Decree No. 192 of 2009 issuing the Basic Statute of the General Authority for Financial Supervision; And the memorandum from the Central Administration for Supervision and Oversight of Financing Companies dated 4/8/2015; And the approval of the Authority's Board of Directors in its session held on 11/8/2015;

Decided: (Article One) Each company engaged in real estate financing activities is required to establish an internal regulation outlining the company's work system, risk management mechanisms, and customer complaint handling procedures, which its directors and employees must comply with, in accordance with Article Three of this Decision.

(Article Two) The Managing Director of the company and all its employees must ensure the implementation of the aforementioned regulation across all operational areas. The Board of Directors, its subsidiary committees, and the internal audit regulatory unit within the company must take necessary measures to verify compliance with its implementation.

(Article Three) The internal regulation must, at a minimum, govern the following: (1) The Board of Directors and its committees:

1. The authorities and powers of the Board of Directors in granting financing, issuing bonds, borrowing, writing off debts, and other tasks related to real estate financing.
2. The role and duties of the Audit Committee and other committees established by the Board of Directors. (2) Organizational and administrative structure:
3. The company's organizational chart.
4. Job descriptions for senior management positions.
5. Jurisdictions of the regulatory units responsible for: Risk, Financial Affairs, Anti-Money Laundering, and Internal Audit.
6. The continuous cycle to be followed, starting from financing application to the company until account settlement (may be included as an appendix to the regulation).
7. Internal record-keeping system.
8. System for recording correspondence exchanged between the company and its counterparties.
9. Relationship between the company's headquarters, its branches, and affiliated offices, and the boundaries of its activities.
10. Document retention policy. (3) Financing granting policies:
11. Financing formats offered by the company and their general terms.
12. The applied credit policy, specifically the rules followed for inquiries, financing granting conditions and procedures, required documents, and credit authorities and powers.
13. Collateral valuation policy.
14. System for periodic follow-up on customer status and compliance with financing terms, recording follow-up results, and identifying balances and accounts experiencing payment delays. (4) Risk management mechanisms:
15. Credit, operational, market, and financial (interest rate and liquidity) risk management policy.
16. Risk monitoring reports, specifying the recipients and their forecasts.
17. Risk review and assessment procedures. (5) Contracts and customer account statements:
18. Specification of real estate financing contract elements.
19. Specification of customer statement milestones, issuance frequency, and distribution mechanisms to customers. (6) Provisioning and debt write-off:
20. Policy for provisioning related to financing and investments.
21. Debt write-off policy and specification of the competent authority. (7) Technical and IT infrastructure:
22. Requirements for the company's technological infrastructure, information systems, databases, connection lines, communication networks, and office equipment.
23. Data security policy, periodic backup of stored data, and secure storage at a location away from company premises, including establishing an alternative operational site for information systems.
24. Reports required from the information system to request operational needs, risk management, and internal audit. (8) Customer complaint handling:
25. Specification of the competent authority for investigating, registering, and following up on complaints.
26. Maintaining a complaint register containing at least the following data: (a) Complaint registration number, submission date, and submitter's name. (b) A clear, concise description of the complaints. (c) List of documents attached to or supporting the complaints. (d) Summary of the findings and opinion resulting from the complaint investigation. (e) Date of notifying the customer of the response and the method used.
27. Policy for handling complaints referred by the Authority.
28. Specific documentation for responding to complaints.
29. Specification of reports and statistics related to complaints and the frequency of their presentation to the Board of Directors. (9) Internal control: The applied internal control system. (10) Cash holding and handling: Cash handling policy, maximum amount to be held in the vault during the day or after office hours, as well as regarding vault levels and their insurance coverage.

(Article Four) Real estate financing companies must align their status regarding compliance with the stipulations contained in this Decision within a period not exceeding three months from its issuance.

(Article Five) This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its issuance. Any provision contradicting its terms is hereby repealed.

Chairman of the Board of Directors Sherif Samy