Minister of Investment Decision No. (86) of 2015 Amending Certain Provisions of the Executive Regulations of the Special Insurance Funds Law

Ministry of Investment Minister

Decision Minister of Investment Decision No. (86) of 2015 Amending Certain Provisions of the Executive Regulations of the Special Insurance Funds Law

Minister of Investment

Having reviewed the Special Insurance Funds Law issued by Law No. (54) of 1975; the Supervision and Control of Insurance in Egypt Law issued by Law No. (10) of 1981; Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; Presidential Decree No. (192) of 2009 issuing the Basic Statute of the Financial Regulatory Authority; Presidential Decree No. (293) of 2014 amending certain competencies; Prime Minister's Council Decision No. (1909) of 2014; Minister of Economy and International Cooperation Decision No. 78 of 1977 issuing the Executive Regulations of the Special Insurance Funds Law; and after obtaining the approval of the Board of Directors of the Financial Regulatory Authority; and based on the opinion of the State Council.

Has decided:

(Article One) Amending the texts of Articles Nos. (3, 6, 7, 11, 12, 13, 14, 15, 16, 21) of the Executive Regulations of the aforementioned Special Insurance Funds Law with the following texts:

Article (3) The Authority shall register the Special Insurance Funds subject to the provisions of Law No. 54 of 1975, and funds shall not commence their activities prior to registration. The founders' representative shall submit the registration application to the Authority on the form prepared by the Authority for this purpose, accompanied by the following documents:

1. Two certified copies of the fund's articles of association.
2. A statement of the general conditions of the insurance policies issued by the fund and the benefits provided, in accordance with the attached actuarial report and in compliance with the rules and regulations approved by the Authority in this regard, for funds requiring such.
3. A statement of the names, titles, and addresses of the persons managing the fund.
4. Proof of payment of the registration fee.
5. Proof of payment of publication expenses.
6. Any other data or documents that the Authority deems necessary to submit.

For members of syndicates or those entitled to their membership, registration applications shall be submitted to the Authority through the syndicate, which must submit the application along with its observations within thirty days from the date of receipt. If the syndicate delays submitting the registration application within this period, the fund's founder may submit the application directly to the Authority. The Authority may request the opinion of the administrative body that established the fund.

Article (6) In the event of refusal to register the fund, the founders' representative shall be notified in writing of the reasons for refusal via a registered letter within fifteen days from the date of the refusal decision.

Article (7) With the Authority's approval, registration data may be amended upon approval by the fund's general assembly, by a majority of attending votes. In the event any amendment is made that could affect the financial soundness of the fund, such as purposes, contributions, or benefits, in addition to the above, such amendments must be submitted alongside the actuarial study prepared for this purpose, as well as the form prepared by the Authority for this purpose. In all cases, these amendments shall not take effect until approved by the Authority. The Egyptian stamp duty shall be paid for any amendment to the purposes, contributions, or benefits at the fund's expense.

Article (11) The fund shall maintain the following registers:

1. Membership register.
2. Register of minutes of board of directors and general assembly meetings.
3. Register of the fund's owned assets, recording the fund's investments in detail and the changes made to them.
4. Revenue register.
5. Members' contributions register.
6. Members' claims, compensation, and benefits register.
7. Expenses register, with detailed data recorded therein.
8. Members' loans register.
9. Members' complaints register.
10. Pending litigation register.

Registers may be developed using computer systems, in compliance with the rules and standards issued by the Authority's Board of Directors. All fund registers shall be approved by the Authority. The fund shall keep its registers, documents, and records at its main administrative center.

Article (12) The fund's board of directors chairman shall submit the following data within the deadlines stipulated in Article (14) of Law No. 54 of 1975: (1) The balance sheet and income and expense accounts in accordance with the rules set by the Authority. (2) Data on new contributions and contributions whose owners ceased payments during the year, in accordance with the rules set by the Authority. (3) The auditor's report confirming that the final accounts were prepared in accordance with Egyptian accounting standards and the estimates adopted by the Authority's Board of Directors in this regard, and that they fairly present the fund's financial position based on its records and other data made available to him. (4) The fund's board of directors report on its activities during the year. (5) A statement of the number of claims submitted to the fund during the year, their value, the amount of insurance benefits paid during the year, and those still under settlement.

The financial statements referred to in item (1) must be submitted along with the fund auditor's report, according to the forms attached to the executive regulations. The report must include, in case of qualifications, a statement of their impact on the fund's financial position. The auditor must notify the fund and the Authority in writing of any deficiency, error, or violation discovered during the audit, while simultaneously notifying the Authority thereof.

Article (13) The fund's financial position shall be examined by an actuarial expert chosen by the fund's board of directors from among those registered in the Authority's register for this purpose, at least once every five years, in accordance with the Authority's regulations. The Authority may, by an administrative decision, assign an actuarial expert to conduct this examination at least one year after the fund's last examination, and may request a re-examination if the actuarial report does not reflect the true financial position. The actuarial report must include at least the data specified in the form prepared by the Authority for this purpose and be certified by the expert. The report shall be submitted to the Authority within six months from the date of the financial position examined. The Authority may extend the report preparation period by three additional months. The fund shall in all cases bear the examination costs determined by the Authority. In all cases, the actuarial expert must document in the report any deficiency, error, or violation discovered during its preparation.

Article (14) The funds of the Special Insurance Funds shall be invested in the following investment categories, subject to the controls accompanying each:

1. Bank deposits, certificates of deposit, and investment certificates in local or foreign currency issued by banks registered with the Central Bank of Egypt, up to a maximum of 35% of the fund's total funds, with the condition that the total
2. Government treasury bonds and bills, and any other government or guaranteed securities, up to a maximum of 15% of the fund's total funds.
3. Negotiable bonds and securities traded in the securities market, up to a maximum of 20% of the fund's total funds, provided that the investment value in bonds issued by a single entity does not exceed 5% of the fund's total funds or 10% of the total value of that entity's issuances, whichever is lower. In case of multiple issuances by entities, the investment in each issuance shall not exceed 10% of its value, subject to the aforementioned overall limit.
4. Units of fixed-income investment funds and money market funds, up to a maximum of 20% of the fund's total funds, provided that the investment value in units of a single investment fund does not exceed 5% of the fund's total funds or 10% of the net asset value of that investment fund, whichever is lower.
5. Units of open-end equity investment funds or established investment funds, up to a maximum of 15% of the fund's total funds, provided that the investment value in units of a single investment fund does not exceed 5% of the fund's total funds, whichever is lower.
6. Shares traded on the Egyptian Exchange, up to a maximum of 15% of the fund's total funds, provided that the investment value in shares issued by a single entity does not exceed 5% of the fund's total funds or 10% of the share capital of the issuing entity, whichever is lower.
7. Provided that the total investment in securities referred to in items (3 and 6) issued by a single entity does not exceed 5% of the fund's total funds.
8. Provided that the total investment in investment fund units referred to in item (5) and securities referred to in item (6) does not exceed 20% of the fund's total funds.
9. Units of real estate investment funds, up to a maximum of 10% of the fund's total funds, provided that the investment value in units of a single investment fund does not exceed 5% of the fund's total funds or 10% of the net asset value of that investment fund, whichever is lower.
10. Ownership of real estate within the country, up to a maximum of 10% of the fund's total funds, subject to being registered or recorded in the Real Estate Registry, and provided that the value of a single property does not exceed 5% of the fund's total funds.
11. Provided that the total investment in investment fund units referred to in item (8) and real estate referred to in item (9) does not exceed 15% of the fund's total funds.
12. Granting cash loans to participating fund members, up to a maximum of 25% of the fund's total funds, with no single member receiving more than 75% of their total paid contributions to the fund, and repayment shall be at a rate not less than the technical interest rate used in the actuarial study or the alternative opportunity rate, whichever is greater.
13. Other investments, up to a maximum of 5%, subject to the Authority's non-objection.

Article (15) The fund is prohibited from dealing with any bank or custodian unless the bank or custodian submits a declaration, as applicable, confirming that the fund shall not be allowed to dispose of or transfer those balances to any other entities or investments except in accordance with instructions stipulated in a letter certified by the fund and approved by the Authority. Such instructions may not be amended or cancelled except through the same approval mechanism. The fund shall, regarding the signatures determined by the Authority, submit to the Authority certificates indicating the original account holder of the fund, as follows: (a) From banks where the fund's cash balances or investments or certificates of deposit or investment issued by them are deposited. (b) From custodians where the fund's securities are deposited. (c) From investment fund management service companies that manage the safekeeping records of the documents in which the fund invests. (d) From other entities determined by the Authority regarding any other investment avenues not mentioned above.

Article (16) The fund founders shall be obligated to appoint a representative to complete the fund's establishment and registration procedures in the register designated for this purpose. The founders' representative shall convene the fund's general assembly to elect the board of directors immediately upon the fund's registration with the Authority.

Article (17) Each fund shall have a board of directors consisting of an odd number of members, not less than five and not more than fifteen. The articles of association shall determine their selection method. It is required that the number of members appointed by the establishing entity, if it contributes to the fund, does not exceed a certain limit if fund circumstances require it and with the Authority's approval. The board of directors composition may include up to two members with expertise in investment or insurance who are not fund members, subject to approval by the fund's general assembly. In all cases, the number of expert members appointed by the establishing entity must be less than half the total number of board members.

Article (21) The fund may request merger into one or more other funds, subject to the approval of the general assembly of each fund by the majority stipulated in Article (21) of Law No. 54 of 1975. The Authority may also issue a decision to merge funds whose members are linked by a common profession, occupation, or social status. A unified realization in the interest of the members of these funds in accordance with the conditions set by the Authority's Board of Directors for this purpose. In all cases, submission of an actuarial report on the financial position of the merging or merged fund(s), as applicable, and the fund to which it is transferred or merged into, as applicable, regarding the general purposes and benefits of the new fund and the rights of its members is required.

(Article Two) A final paragraph shall be added to Article (1) of the Executive Regulations of the aforementioned Special Insurance Funds Law, and new articles numbered (14 bis), (15 bis), (16 bis), (17 bis), (18 bis), (19 bis), (20 bis), (21 bis) shall be added to the same regulations, as follows:

Article (1) Final Paragraph: All of the foregoing in accordance with the basic form issued by the Authority in this regard.

Article (14 bis): The fund's board of directors may entrust the management of its investment portfolio to one or more investment managers from among companies licensed by the Authority to engage in securities portfolio formation and management activities, subject to the investment constraints stipulated in these regulations and the rules and standards issued by the Authority's Board of Directors. The Authority's Board of Directors shall issue the rules and standards governing the aforementioned contracting, including service performance requirements and the minimum obligations of both parties.

Article (15 bis): The fund whose invested funds exceed 100 million Egyptian pounds shall be obligated to appoint a full-time investment manager, subject to Authority approval, accompanied by a sufficient number of employees, managing no less than 80% of its funds, in accordance with what the Authority's Board of Directors determines regarding his duties, responsibilities, and required qualifications. The fund may, in addition to this, contract with one or more companies to manage less than 80% of its funds, as stipulated in Article (18).

Article (16 bis): A general assembly member may submit a written request – on the approved form – to the fund manager for this purpose. Such procedures must be completed at least 24 hours prior to the general assembly meeting, and a member may not represent more than one other member.

Article (17 bis) (1): The fund shall notify the Authority of the date and venue of each general assembly meeting at least fifteen days prior to its convening, via a letter attached with a copy of the invitation sent to members, the agenda, and accompanying documents. The assembly shall not deliberate on matters not included in the agenda. The Authority may dispatch a representative to attend the meeting, monitor the validity of procedures, and provide any observations it deems necessary.

Article (17 bis) (2): The fund's board of directors shall be responsible for formulating fund policies, overseeing its affairs and proper management, and approving its financial statements. To this end, it shall establish controls ensuring sound performance and achievement of its objectives, and undertake any action realizing the fund's purposes, including appointing an investment manager and contracting with licensed asset management companies.