Board of Directors Decision No. 142 of 2018 (Repealed) on Regulations for the Registration and Transfer of Microfinance Company Branches

Egyptian Financial Regulatory Authority Board of Directors Decision No. 142 of 2018 Dated 13/09/2018 Regarding Regulations for the Registration and Transfer of Branches of Companies Operating in the Microfinance Activity

The Board of Directors of the Egyptian Financial Regulatory Authority Having reviewed Law No. 159 of 1981 on Joint Stock Companies, Limited Liability Companies and Companies Limited by Shares, and its amendments: And the Capital Market Law No. 95 of 1997, and its amendments: And Law No. 10 of 2009 Regulating Supervision over Non-Banking Financial Markets and Instruments: And Law No. 141 of 2014 Regulating the Microfinance Activity: And Presidential Decree No. 192 of 2009 Issuing the Statute of the Egyptian Financial Regulatory Authority: And Board Decision No. 158 of 2014 on Defining the Scope of Microfinance Activity: And Board Decision No. 161 of 2014 on Compliance, Continued Compliance, and Deregistration Rules in the Account Supervision Register for Microfinance Companies, Associations, and Non-Profit Organizations Licensed to Conduct this Activity with the Authority: And Board Decision No. 171 of 2014 on Service Fees for Entities Operating in the Microfinance Activity: And Board Decision No. 173 of 2014 on Rules and Regulations for Companies Operating the Microfinance Activity: And Board Decision No. 53 of 2018 on Licensing, Renewal, and Share Reduction Rules for Companies in Non-Banking Financial Activities: And Board Decision No. 121 of 2018 on Conditions and Procedures for Licensing Companies to Operate the Microfinance Activity: And upon the approval of the Authority's Board of Directors in its session dated 13/09/2018:

Has Decided

(Article One) A company shall not conduct the activity through branches or other locations other than the company's headquarters, except after obtaining the Authority's prior approval to register the branch in the designated register at the Authority. A request shall be submitted by the company accompanied by documentation proving compliance with the conditions stipulated in this Decision.

(Article Two) The competent department shall conduct an intensive review of branch registration, submission, and closure requests regarding the fulfillment of prescribed conditions, and form a specialized committee within the Authority to conduct field inspections to verify the availability of administrative and IT infrastructure, organizational structures, and other requirements. The committee shall prepare its report within a period not exceeding two weeks from the date the company fulfills the required documents. The results of the intensive review issued by the competent department may suffice for a marketing branch, and reliance may also be placed, if the field inspection committee deems it appropriate, for a financing branch, subject to inspecting the branch's technical and IT requirements through the headquarters. In case any requirements are not met, the Authority shall notify the company of what it must complete. The Authority shall commit to issuing approval to the company within one week of confirming the company's fulfillment of the aforementioned requirements and settling the prescribed inspection and study service fee.

(Article Three) Branch Registration A special register shall be established at the Authority for branch registration, with each branch assigned a serial number. The company's license number shall be arranged, and a decision by the Authority's Chairman shall be issued approving the registration, transfer, or closure of a branch. The Authority shall issue its decision to approve or reject branch registration in the designated register according to market needs and geographical distribution.

(Article Four) Method of Registration in the Branch Register Branches shall be registered in the register according to the approval date as follows:

Register Serial Number	Branch Classification	Company License Number	Branch Number within Company	Branch Name	Branch Manager Name	Address	Registration Date
	Financing / Marketing

(Article Five) Registration Certificate The competent department at the Authority shall issue a certificate of the company's branch registration in the designated register within five working days from the date of the Authority Chairman's approval. The certificate shall include all data related to the branch, specifically (Branch Registration Number - Branch Classification - Company License Number - Branch Number within Company - Branch Name - Branch Address - Registration Date).

(Article Six) Administrative Organization of the Branch Network

1. Each company commits to dividing its branches approved for registration in the register as follows: (a) Financing Branches: Specialized in performing all tasks related to the microfinance activity and its various specialized services. The company's credit policy must be placed in a credit decision authority table according to one of the following determinants:

• Central authority for grants by the Credit Committee at Headquarters and the Company's Regional Credit Committees.
• Central authority for grants by Credit Committees within Financing Branches.
• Discretionary authority for credit grants distributed among committees at Headquarters, Regions, and Branches according to different financing tiers, provided financing products, and acceptable risk levels at the Company. (b) Marketing Branches: Specialized in performing marketing operations tasks for clients related to the microfinance activity, obtaining necessary documents for financing studies, financing disbursement procedures, and collecting dues, providing specialized services related to the microfinance activity without conducting financing study and grant operations.

2. Each company commits to forming regional credit areas in its organizational structure to supervise the financing branch network, monitor their risks, and make credit decisions according to the company's credit policy in this regard, with one regional credit area supervising up to (20) branches at maximum, considering the various center risks within a single area, and the acceptable risk level for each area coordinated with the total financing portfolio size at the Company. The regional risk monitoring shall be handled by a subordinate risk officer who reports to the Company's Chief Risk Officer, ensuring coverage of all risks facing the Company's branches as stipulated in Article (18) of the Activity Practice Rules for Microfinance Companies.

(Article Seven) Submission of Registration Request The branch registration request shall be submitted on the form prepared by the Authority, signed by the Chairman of the Board or Managing Director, stamped with the company seal, and accompanied by the following documents:

1. A copy of the Board of Directors meeting minutes including approval to open the branch, determine its location, classify the branch, name the branch manager, and appoint the minimum number of required positions for the branch.
2. A recent official extract from the company's commercial register showing the issued and paid-up capital.
3. A certified statement from the authorized signatory for the company regarding all branches registered with the Authority, including registration data, as well as the branch's status regarding conducting the activity according to its classification.
4. The branch location must be independent of the company's headquarters, and a lease agreement with a specific date or a registered property ownership deed for the premises must be submitted, stamped with the company seal and signed by the authorized signatory.
5. A statement of physical and electronic devices and equipment suitable for the nature of the branch's activity, stamped with the company seal and signed by the authorized signatory.
6. An affirmation of the branch's IT and technical infrastructure readiness for the scheduled requirements for effective and full operation, according to the targeted workload, along with documentation proving the procurement of connection lines between the company's headquarters and the new branch in accordance with the requirements stipulated in Article (16) of the Activity Practice Rules and Standards for Microfinance Companies, and completing the data collection form prepared by the Authority regarding computers and other equipment to be used at the new branch.

(Article Eight) Administrative Controls for Branch Registration Branch registration requires fulfilling the following administrative requirements by the competent department:

1. The company's payment of the prescribed inspection and study service fee.
2. The company's regular payment of supervision and monitoring fees, and the development fee.
3. No measures or penalties stipulated in Law No. 141 of 2014 have been taken against the company, unless the grounds for such measure have been rectified and three months have elapsed.
4. The company's commitment to submitting regulatory reports to the Authority and annual and periodic financial statements on time, and fulfilling inspection notes and compliance requirements.

(Article Nine) Technical Controls for Branch Registration Branch registration requires fulfilling the following technical requirements by the competent department:

1. Verification that the geographical scope of the new branch falls within areas most in need of microfinance activity services, which suffer from a low number of service providers at the governorate level.
2. Submission by the company of its annual strategic plans document to the Authority, reflecting the company's vision for future growth of its activity in the market, which must include at a minimum a clear description of the following items: targeted market share, targeted geographical areas, targeted customer segments distributed geographically, types of financing products and acceptable risk levels for each, number of branches targeted for registration during the year, and their expected economic horizon.

(Article Ten) Conditions for Occupants of Key Positions in the Company's Branch Network (Regional Credit Area Risk Officer, Branch Manager) Occupants of these positions must possess suitable practical experience as follows: Position of Regional Credit Area Risk Officer: Suitable Practical Experience Not less than 6 years at minimum in the field of financing/credit/risk grants in banking work fields or companies conducting financing activities or microfinance entities in general, and must have previously held a suitable supervisory position in one of the financial institutions/entities or companies. Position of Branch Manager: Suitable Practical Experience Not Less Than 4 Years at Minimum in the Field of Financing/credit grants in banking work fields or companies conducting financing activities or microfinance entities in general, and must have previously held a suitable supervisory position in one of the financial institutions/entities or companies. And the following conditions must be met in both: Must have a good reputation and clean record. Must possess legal capacity. Must hold a suitable higher education qualification for the nature of his work or possess specialized professional certificates. Must be full-time, and not employed in any capacity by another company/entity. Must not have previously been sentenced to a criminal penalty or a misdemeanor penalty for an offense involving honor or trust, or declared bankrupt, unless his reputation has been restored. Must not be, nor his relatives up to the second degree, among those prohibited from receiving financing from the company or any related services or activities. Regarding occupants of marketing branch manager positions, they must possess at least 5 years of experience in microfinance business activities, and preferably hold a suitable higher education qualification. With the possibility of allowing branch managers in close locations to exercise overall supervision over a number ranging between (2-3) branches at maximum, subject to the company's request and submission of proof of geographical proximity and the person's ability to manage a large number of employees, and without the portfolio size of those branches exceeding (3%) of the company's total portfolio size. The company commits to notification within a period not exceeding two weeks from the change of all documents related to the new branch manager and obtaining documentation confirming the Authority's non-objection to him.