Egyptian Gazette - Issue 102 on May 6, 2014

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General Authority for Financial Regulation

Decision No. 55 of 2014 of the Authority

Dated 13/04/2014

Regarding the Rules and Procedures Governing the Transfer of More Than One Sukuk Portfolio to a Sukuk Company and the Issuance of More Than One Sukuk Issue by Non-Sukuk Joint Stock Companies

The Board of Directors of the General Authority for Financial Regulation

Having reviewed Law No. 159 of 1981 on Joint Stock Companies, Limited Partnerships, and Limited Liability Companies, and its Executive Regulations;

And the Capital Market Law No. 95 of 1997, and its Executive Regulations;

And Law No. 10 of 2009 on Regulating Supervision over Non-Egyptian Securities and Financial Instruments;

And Presidential Decree No. 193 of 2009 Issuing the Basic Statute of the General Authority for Financial Regulation;

And Authority Board Decision No. 105 of 2011 Regarding the Rules and Procedures Governing the Transfer of More Than One Sukuk Portfolio to a Sukuk Company and the Issuance of More Than One Sukuk Issue by Non-Sukuk Joint Stock Companies;

And the positions of the Authority's Board of Directors in its session held on 13/04/2014:

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Decided:

(Article One)

1. The following conditions must be met to license a Sukuk company to be transferred more than one Sukuk portfolio:

• The issued capital of the Sukuk company must be fully paid and not less than five million Egyptian pounds.

2. The trustee leading the management of Sukuk bond issuances shall not be exempt from any obligations towards previously issued Sukuk bonds.

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3. The Sukuk company must hold a commitment from the owner of the financial rights portfolio to transfer those rights to the Sukuk company, specifying the estimated value of the transferred portfolio. This commitment must be binding and valid for at least six months.

4. The Sukuk company must hold a commitment to convert future financial rights and a master issuance program for Sukuk bonds, with the company committing to comply with all legal requirements when executing bond issuances according to this program.

5. Fulfilling its disclosure obligations in accordance with the laws, regulations, and rules issued by the Authority's Board of Directors.

6. The Sukuk company fulfilling all its obligations towards the Authority, and paying the prescribed fees according to Article (134) of the Executive Regulations of Law No. 95 of 1997.

7. Paying the insurance value required to be deposited with the Authority to license the company to transfer a new Sukuk portfolio to it, according to Authority Board Decision No. 107 of 2008. The Sukuk company must attach to its license application for issuing Sukuk bonds against a new Sukuk portfolio the following:

8. A declaration from the trustee of the existing Sukuk portfolio and a certificate from the Egyptian Clearing, Depository and Central Securities Company confirming the fulfillment of all the company's financial obligations and economic commitments in its scheduled reviews according to the terms of the existing bond issuance.

9. A commitment from the company, certified by the Managing Member and the Chief Financial Officer, submitted to the General Authority for Financial Regulation, stating that the company will maintain separate accounts for each Sukuk transaction (bond value, yield rate, issuance date, maturity date, issuer company name, trustee name, custodian name, collection agent), and committing not to commingle these funds with each other or with the trustee's funds and assets.

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3. A commitment from the company leading the collection, certified by the Managing Member and the Chief Financial Officer, and submitted to the General Authority for Financial Regulation, stating that the company will segregate the collected amounts for each existing Sukuk portfolio it collects and the Sukuk portfolio intended to be deposited with it (custody value, date of collection service contract, agreement with the bond issuer company, name of the company managing the portfolio, name of the trustee to whom claims are submitted), and committing not to commingle these amounts with each other or with its own funds.

4. A commitment from the trustee, certified by the legal representative and submitted to the General Authority for Financial Regulation, stating that the trustee will maintain separate accounts for each Sukuk portfolio deposited with it and segregate the funds for each existing Sukuk portfolio and the Sukuk portfolio intended to be deposited with it (custody value, bond par value, yield rate, issuance date, maturity date, custody contract date with the issuer, trustee name, collection company name), and committing not to commingle these funds with each other or with the trustee's funds and assets.

5. Committing to provide a credit rating certificate for the Sukuk portfolio against which bonds are issued, with a rating not lower than the level indicating the ability to fulfill obligations, according to rules issued by the Authority's Board of Directors.

6. Disclosing by publishing the subscription prospectus or information memorandum for the bonds intended to be issued regarding the status of existing bonds, which must include the trustee name, custodian name, collection company name, bond par value, current bond balance, latest credit rating, and status of interest and principal repayment.

(Article Two)

In the event that a Sukuk company executes a master issuance program for Sukuk bonds across multiple issuances in exchange for transferring the Sukuk portfolio to the company, the Authority's Board of Directors shall issue its approval for the master Sukuk bond issuance program. The Authority shall study each issuance separately in accordance with the master issuance program and verify compliance with all legal requirements and procedures necessary for its issuance.

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(Article Three)

To license non-Sukuk joint stock companies to issue more than one Sukuk bond issue, the following must be attached to the license application:

1. A commitment from the company, signed by the Managing Member and the Chief Financial Officer, to maintain independent accounts for each Sukuk bond issue against one of the company's independent financial rights portfolios, including at least the following:

• Assets of each financial rights portfolio and obligations attached to the bond issuance.
• Value of each bond issue, number of bonds, par value per bond, date and term of each Sukuk bond issue, trustee name.
• Independent accounts related to the collection of financial rights for each Sukuk portfolio.

2. A commitment to conduct a credit rating for each Sukuk bond issue and a credit rating for the issuing company, with a rating not lower than the level indicating the ability to fulfill obligations, according to rules issued by the Authority's Board of Directors.

3. A commitment to fulfill the obligations stipulated in Article (12) of the Capital Market Law No. 95 of 1997.

4. A declaration from the trustee and a certificate from the Egyptian Clearing, Depository and Central Securities Company and the company's Managing Member confirming full fulfillment of obligations attached to previous Sukuk bond issuances.

5. A certificate from the external auditor confirming fulfillment of disclosure obligations according to prescribed standards.

(Article Four)

Decision No. 105 of 2011 of the Authority's Board of Directors is hereby repealed.

(Article Five)

This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the date of its publication in the Egyptian Gazette.

Chairman of the Board of Directors
Sherif Samy