Decision No. (53) of 2018 dated 10/6/2018

Amending Decision No. (53) of 2018 of the Authority's Board of Directors regarding the conditions for granting and maintaining licenses and the rules for share ownership of companies operating in non-banking financial activities

Board of Directors of the Egyptian Financial Regulatory Authority

Having reviewed Law No. (10) of 1981 concerning supervision and regulation of insurance in Egypt and its executive regulations; and Law No. (159) of 1981 concerning joint stock companies, limited partnerships by shares, limited liability companies, and single-shareholder companies, and its executive regulations; and Capital Market Law No. (95) of 1997, its amendments, executive regulations, and decisions issued pursuant thereto; and Financial Insurance Law No. (95) of 1995 and its executive regulations; and Law No. (93) of 2000 issuing the law on electronic deposit and registration of securities and its executive regulations; and Real Estate Financing Law No. (148) of 2001 and its executive regulations; and Anti-Money Laundering Law No. (80) of 2007 and its executive regulations; and Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; and Law No. (141) of 2014 regulating microfinance activities; and Presidential Decree No. (191) of 2009 concerning the rules governing the Egyptian Exchange and its financial affairs; and the Basic Statute of the Egyptian Financial Regulatory Authority issued by Presidential Decree No. (192) of 2009; and Decision No. (72) of 2013 of the Authority's Board of Directors regarding the regulatory and supervisory controls for factoring activities and its amendments; and Decision No. (11) of 2014 of the Authority's Board of Directors regarding the rules for listing and delisting securities on the Egyptian Exchange and its amendments; and Decision No. (106) of 2015 of the Authority's Board of Directors regarding the rules regulating licensing for securities brokerage activities; and Decision No. (109) of 2015 of the Authority's Board of Directors regarding the conditions for registration, renewal, and deletion in the registers of licensed real estate brokers and agents, and the rules and standards governing their practice; and Decision No. (125) of 2015 of the Authority's Board of Directors regarding the expertise and competence rules for those managing companies operating in the securities field; and Decision No. (135) of 2016 of the Authority's Board of Directors regarding the controls on acquiring or controlling securities brokerage companies and investment fund management companies, and the rules for documenting situations in accordance with Articles (328, 328 bis (a)) of the executive regulations of the Capital Market Law; and Decision No. (65) of 2017 of the Authority's Board of Directors regarding the controls on share ownership of companies operating in the securities field; and Decision No. (53) of 2018 of the Authority's Board of Directors regarding the conditions for granting and maintaining licenses and the rules for share ownership of companies operating in non-banking financial activities; and the approval of the Authority's Board of Directors in its meeting held on 10/6/2018

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Decided

(Article One)

Items 4 and 5 are added to the text of Article Four of Decision No. 53 of 2018 of the Authority's Board of Directors mentioned above, concerning the requirements for companies seeking preliminary approval for establishment or a license to conduct one of the non-banking financial activities, according to the following text, with reordering of items due to their precedence:

4. That the company's articles of association stipulate the mandatory use of cumulative voting in the election of board members.
5. That the company's articles of association stipulate a minimum relative representation of capital in the company's board of directors.

Based on the provision of Article Ten of Decision No. 53 of 2018 of the Authority's Board of Directors, the provisions of items 4 and 5 shall apply to companies that obtained preliminary approval for establishment or a license from the Authority on the date of implementation of this decision, provided that the companies shall regularize their status within one year from the date of implementation of this decision.

(Article Two)

Item is added to the text of Article Eight of Decision No. 53 of 2018 of the Authority's Board of Directors mentioned above, concerning the considerations to be taken into account in ruling on requests to obtain the Authority's approval for ownership, as follows:

5. Compliance with the cumulative voting system rules in the election of board members in the company, as well as the existence of a minimum relative representation of capital in the company's board of directors.

(Article Three)

This decision shall be published in the Egyptian Gazette and on the websites of the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette.

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

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1. Cumulative voting is defined as granting each shareholder a number of votes equal to the number of shares they own to vote for the election of the company's board members, and the shareholder may allocate all their votes to one or more candidates.
2. Minimum relative representation of capital in the company's board of directors is defined as ensuring a minimum percentage representation in the company's board membership, not exceeding one seat for every 10% of the company's shares.

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