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2020-01-01

Decision of the Board of Directors of the Financial Regulatory Authority No. 45 of 2020 Regarding Professional Liability Insurance for Licensed Financial Consulting and Valuation Entities

The Financial Regulatory Authority (FRA) issued Decision No. 45 of 2020 mandating that licensed property and liability insurers must enforce specific professional liability coverage for financial consulting and valuation entities registered or seeking registration with the FRA. The decision requires insurance policies to explicitly cover violations of Egyptian Financial Valuation Standards and professional performance guidelines, with coverage amounts set at double the entity's annual premium income but not less than 100,000 Egyptian Pounds. Additionally, policies must maintain a minimum three-year term and can only be cancelled upon formal written instruction from the Authority, with the regulation taking effect the day after its publication in the Egyptian Gazette.

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Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision of the Board of Directors of the Financial Regulatory Authority
No. (45) of 2020 dated 2020/3/22
Regarding Professional Liability Insurance
Arising from the Practice of Financial Consulting Companies and Entities Licensed by the Authority to Perform
Financial Valuation and Fair Value Study Preparation at the Authority

Board of Directors of the Financial Regulatory Authority
Having reviewed Law No. 10 of 1981 regarding Supervision and Control of Insurance in Egypt and its Executive Regulations and amendments;
And Law No. 95 of 1992 regarding the issuance of the Capital Market Law and its Executive Regulations and amendments;
And Law No. 10 of 2009 regarding the regulation of supervision over non-banking financial markets and instruments;
And Presidential Decree No. 192 of 2009 issuing the Basic Statute of the Financial Regulatory Authority;
And Investment Minister Decision No. 101 of 2007 regarding adding financial consulting activities for securities to the activities of companies operating in the securities sector as stipulated in Article (27) of Law No. 95 of 1992 issuing the Capital Market Law;
And General Capital Market Authority Board Decision No. 18 of 2007 regarding the conditions for registering financial advisors in the registry prepared by the Authority;
And Authority Board Decision No. 1 of 2017 regarding the issuance of Egyptian Financial Valuation Standards for Enterprises;
And Authority Board Decision No. 85 of 2018 regarding the conditions required for board membership of companies under the Authority's supervision and its amendments;
And Authority Board Decision No. 114 of 2018 regarding the conditions and controls for registering financial consulting companies and entities licensed by the Authority to perform financial valuation and fair value study preparation at the Authority and its amendments;
And Authority Board Decision No. 22 of 2019 regarding the extension of the deadline for signing registration status of financial consulting companies for securities and entities licensed by the Authority to perform financial valuation and fair value study preparation for the Authority;

And Authority Board Decision No. 83 of 2019 regarding the extension of the deadline for signing registration status of financial consulting companies for securities and entities licensed by the Authority to perform financial valuation and fair value study preparation for the Authority;
And a memorandum from the Central Administration for Financial Product Approval dated 2020/03/05;
And the approval of the Authority's Board of Directors in its meeting held on 2020/3/22.

Decided

(Article One)
Insurance companies for property and liability licensed by the Authority are committed, when issuing professional liability insurance policies for companies and foreign entities, whether registered or seeking registration in the financial advisors registry and entities licensed by the Authority to perform financial valuation and fair value study preparation, or upon renewal of registration, to the following insurance conditions:

  • The professional policy must cover the practice of the company/entity and its specialized employees in financial valuation and fair value study preparation, and their violation of the Financial Valuation Standards for Enterprises and the Basic Standards of Professional Performance issued by the Financial Regulatory Authority.

  • The insurance amount must be double the company's total annual premium income, with a minimum of 100,000 Egyptian Pounds (one hundred thousand Egyptian Pounds).

  • The insurance period must not be less than three years.

  • The policy shall not be cancelled except by an official letter from the Authority.

(Article Two)
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.

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

Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Telephone: +202 3545560
Fax: +202 3570066
WWW.FRA.GOV.EG

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