Regulatory Alerts2009-01-01
Egyptian Financial Supervisory Authority Decision No. (88) of 2009 Regarding Regulations for Investment Fund Management Service Companies
The Egyptian Financial Supervisory Authority (EFSR) issued Decision No. 88 of 2009 to establish operational and governance regulations for licensed management service companies handling investment funds. The decision mandates that open-end and real estate funds contract exclusively with EFSR-licensed service providers, outlines their specific duties including transaction settlement, NAV calculation, and dividend supervision, and enforces strict corporate requirements such as a minimum two-million-EGP paid-up capital and Egyptian joint-stock structure. Furthermore, it prohibits cross-ownership exceeding 20% between funds, sponsors, or management companies and the service providers, mandates strict confidentiality protocols, and sets a six-month compliance deadline for existing funds to formalize these contracts.
Decision of the Board of Directors of the Egyptian Financial Supervisory Authority
No. (88) of 2009 dated 2009/12/21 Regarding the Regulations Governing the Operations of Investment Fund Management Service Companies
Chairman of the Board of Directors of the Egyptian Financial Supervisory Authority
Having reviewed Law No. 95 of 1992 issuing the Capital Market Law and its Executive Regulations, and Law No. 10 of 2009 regarding the regulation of supervision over markets and non-banking financial instruments, and Minister of Investment Decision No. 295 of 2007 adding the management services activity in the field of investment funds, and the memorandum presented to the Authority's Board of Directors, and the approval of the Authority's Board of Directors in its session held on 2009/12/21,
Article (1)
The provisions of this Decision shall apply to companies licensed to conduct management services activities in the field of investment funds, referred to in the application of its provisions as "management service companies".
Article (2)
Management service companies shall undertake the following activities:
- Recording and settling transactions conducted on unlisted investment documents.
- Registering the issuance and redemption of open-end investment fund documents.
- Safeguarding documents and records of real estate fund assets.
- Preparing and maintaining an electronic register of document holders to prove investors' ownership of the documents.
- Preparing a daily statement of the number of outstanding documents at the end of the business day.
- Calculating and publishing the net asset value per document daily.
- Supervising the collection of dividends from securities in which the fund invests and issuing periodic reports thereon.
- Supervising the distribution of the fund's dividends to document holders and issuing periodic reports thereon.
Article (3)
A management service company must be established as an Egyptian joint-stock company, with a minimum issued capital of two million Egyptian pounds, at least half of which must be paid up at the time of establishment. It must also possess the technical specifications, professional expertise, and operational systems determined by the Authority.
Article (4)
Open-end and real estate investment funds must contract with one of the management service companies licensed by the Authority and must include the company's name and details in the fund's prospectus or information memorandum.
Article (5)
An investment fund, its sponsor, or its management company shall not contract with a management service company if any of them holds more than 20% ownership in it, or if it is affiliated with any of them directly or indirectly, whether through actual control over the decisions of the management service company's board of directors or its general assembly, or through common ownership by natural persons.
Article (6)
The funds referred to in Article (4) of this Decision, established after the addition of the management services activity in the field of investment funds on 2007/11/7, or those committed in their prospectus, information memorandum, or licensing documents from the Authority to contract with a management service company, shall execute such contracts in accordance with the provisions of this Decision and notify the Authority thereof within a period not exceeding six months from the effective date of this Decision. Other funds, as well as securities portfolio management companies, may contract with management service companies, provided they notify the Authority thereof.
Article (7)
Management service companies are obligated to maintain the confidentiality of information and data related to their operations in the course of performing their duties under this Decision. They must verify that all their employees and investors comply with the confidentiality of such information and data.
Article (8)
This Decision shall be published in the Egyptian Gazette and shall take effect from the day following its publication. It shall also be published on the Authority's website.
Dr. Zakaria Bahaa El-Din Chairman of the Board of Directors
46076
Egyptian Financial Supervisory Authority Egyptian Financial Supervisory Authority (EFSR)
Telephone: 0040-202-25770040 - 0040-202-25770041 Fax: 0040-202-25770041 Email: info@efsa.gov.eg Website: www.efsa.gov.eg
Headquarters: Smart Village, Building 15 - 84 B Km 28, Cairo-Alexandria Desert Road 6th of October Governorate, Postal Code: 12577