Regulatory Alerts2016-01-01
Decision No. (17) of 2016 of the Authority's Board of Directors
The Financial Regulatory Authority's Board of Directors issued Decision No. (17) of 2016 to establish the mandatory eligibility criteria for founding charitable investment fund companies in Egypt. The regulation mandates that founders must be specific legal entities, civil institutions, or natural persons, with legal entities comprising at least two-thirds of the issued capital unless exempted by the Authority. It further prohibits entities under insolvency or with management convicted of crimes against honor from participating, requires prior regulatory approval for any share transfers, and stipulates publication in the Egyptian Gazette for immediate enforcement.
Board of Directors Secretariat
Decision No. (17) of 2016 of the Authority's Board of Directors
Dated 28/2/2016 Regarding the Conditions to be Met by the Founders of a Charitable Investment Fund Company
The Board of Directors of the Financial Regulatory Authority Having reviewed the Joint Stock Companies, Partners Limited by Shares and Limited Liability Companies Law issued by Law No. (159) of 1981; and the Capital Market Law issued by Law No. (95) of 1992 and its executive regulations and decisions issued in implementation thereof; and the Deposit and Registration of Securities Law issued by Law No. (93) of 2000 and its executive regulations; and Law No. (10) of 2009 regarding the regulation of supervision over non-banking financial markets and instruments; and Presidential Decree No. (191) of 2009 regarding the regulations governing the Egyptian Exchange and its financial affairs; and Presidential Decree No. (192) of 2009 issuing the Basic Statute of the Financial Regulatory Authority; and Decision No. (51) of 2014 of the Authority's Board of Directors regarding the conditions to be met by the founders of an investment fund company; and the approval of the Authority's Board of Directors at its meeting held on 28/2/2016;
Decided
(Article One)
The founders of the investment fund company must be among the following entities and persons:
- Waqf (endowment) authorities.
- Civil society associations and institutions.
- Companies, as permitted by the governing laws.
- Legal persons whose bylaws permit such participation.
- Natural persons wishing to participate in establishing these funds.
(Article Two)
Capital contributions to the investment fund company shall be subject to the following:
- The total contribution of the fund's founders shall not be less than the entire issued capital.
- The contribution ratio of legal persons shall not be less than two-thirds of the fund company's capital.
The Authority's Board of Directors may, for reasons it deems appropriate, grant full or partial exemption from the ratio stipulated in item (2) of this Article.
(Article Three)
The following conditions must be met by entities permitted to participate in founding the fund company:
- The entity must not be in a state of financial insolvency or bankruptcy.
- Members of the entity's board of directors or its management must not have previously been convicted of a felony or a misdemeanor involving a crime against honor or integrity, unless their reputation has been restored. This shall be confirmed by a signed declaration from the entity's Chairman of the Board or Managing Director, under their responsibility.
The ruling stipulated in item (2) shall also apply to natural persons participating in founding the fund company.
(Article Four)
Transferring ownership of the fund company's shares requires the continued fulfillment of the conditions stipulated in this Decision, and obtaining the Authority's prior approval thereof.
(Article Five)
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
Sherif Samy