Regulatory Alerts2020-01-01
Decision No. 162 of 2020 of the Authority's Board Regarding the Establishment of a Reserve for Risks from Applying Egyptian Accounting Standard No. 47 on Insurance Companies
The Financial Regulatory Authority (FRA) issued Decision No. 162 of 2020 mandating Egyptian insurance companies to establish a reserve equal to 1% of total assets to offset risks arising from implementing Egyptian Accounting Standard No. 47 on Financial Instruments. Capitalized from post-tax net profits for the fiscal year ending June 30, 2020, the reserve must be recorded under shareholders' equity and cannot be utilized without explicit FRA approval. Company boards must actively monitor compliance, secure implementation resources, define applicable business models, evaluate IT and staffing readiness, refine risk and investment frameworks, and ensure cross-departmental coordination.
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