Board of Directors Secretariat

Decision No. (130) of 2014

dated 14/9/2014

Regarding the valuation guidelines for investment fund management service companies for the net assets of investment funds

and specifying the assets and securities that require the engagement of a specialized valuer and an independent financial advisor for valuation

The Board of Directors of the General Authority for Financial Supervision:

Having reviewed the Capital Market Law issued by Law No. (95) of 1992 and its Executive Regulations,
and the decisions issued in implementation thereof;
and Law No. (10) of 2009 regarding the regulation of supervision over non-banking financial markets and instruments;
and Presidential Decision No. (192) of 2009 issuing the Basic Statute of the General Authority for Financial Supervision;
and Board Decision No. (121) of 2010;
and Board Decision No. (57) of 2014;
and Board Decision No. (129) of 2014;
and the approval of the Authority's Board of Directors in its session held on 14/9/2014;

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Article One

(Article One)

The investment fund management service company shall periodically, at least once every three months, value the assets and securities not listed on the stock exchange in which investment funds invest their funds, while ensuring the appointment of specialized valuation entities, all in accordance with the guidelines set forth in this Decision.

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(Article Two)

The investment fund management service company must appoint an independent financial advisor and/or a specialized valuer—as applicable—to value the assets in which investment funds invest, under the following circumstances and as detailed in this Article:

(a) The fair value of equity investments shall be determined by engaging one of the independent financial advisors licensed by the Authority in the following cases:

1. Investments in unlisted companies whose shares are traded on the stock exchange.

2. Investments in listed companies whose shares are traded on the stock exchange, but have no announced market prices at the time of valuation, or where more than three months have passed since the last announced price, or where trading is limited and inactive, and the book value of the investment exceeds 10% of the fund's assets. Investments below this threshold shall be valued in accordance with Egyptian Accounting Standards.

3. Investments in listed companies whose shares are traded on the stock exchange, and the book value of the investment exceeds 15% of the fund's assets.

4. Investments in unlisted companies whose share trading on the stock exchange is suspended, and whose real estate assets constitute at least 80% of the company's total assets, the determination of fair value by the independent financial advisor must be based on reports from two licensed real estate appraisers appointed by the Authority—each working independently.

(b) The fair value of real estate assets for real estate investment funds shall be determined by engaging two licensed real estate appraisers appointed by the Authority—each working independently.

It is required that full independence be maintained in the external entities entrusted with the valuation process, and that no more than two months have elapsed since the date of the valuation report.

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(Article Three)

The investment fund management service company must adhere to the following regarding the valuation of assets and securities in which investment funds invest, excluding the cases stipulated in Article Two of this Decision:

(a) Listed stock exchange shares – other than the cases stipulated in Article Two, paragraph (a) – shall be valued based on the prevailing closing prices at the time of valuation. However, for shares with no announced market prices at the time of valuation, or where more than three months have passed since the last announced price, or where trading is limited and inactive, valuation may be conducted in accordance with Egyptian Accounting Standards.

(b) Investment documents in other investment funds shall be valued based on the latest announced net asset value or valuation of the document.

(c) Treasury bills shall be valued according to the purchase price plus accrued interest from the purchase date to the valuation date, calculated based on the yield derived from the purchase price.

(d) Bonds shall be valued according to the classification of this investment either for holding or trading purposes, in accordance with Egyptian Accounting Standards.

(e) Bank savings certificates and investment certificates shall be valued according to the purchase price plus the return accrued for the period from the purchase date or the last distribution date, whichever is closer, up to the valuation date.

(f) Fixed assets – if any – shall be valued in accordance with Egyptian Accounting Standards.

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(Article Four)

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

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Chairman of the Board of Directors
Sherif Samy

(Stamp: General Authority for Financial Supervision - Chairman's Office)
46076