Board of Directors Decision No. (3) of 2012 on Regulating Investment Funds and Financial Services

1 2012 (3) Board of Directors Decision

Based on Article (23) of Law No. (8) of 2001 regarding the Capital Market Authority, and Article (108) of Law No. (33) of 1999 regarding the Regulation of Financial Markets. And based on the Board of Directors' decision.

Article (1): This decision shall be called (Board of Directors Decision No. (3) of 2012 regarding the Regulation of Investment Funds and Financial Services). It shall come into effect from the date of its publication in the Official Gazette.

Article (2): The following words and phrases, wherever they appear in this decision, shall have the meanings assigned to them below, unless the context requires otherwise: The Authority: The Capital Market Authority. The Board: The Board of Directors of the Authority. The Law: The Law of the Capital Market Authority No. (8) of 2001 and its amendments, and the Law of Regulating Financial Markets No. (33) of 1999 and its amendments, and any other law that replaces or amends them. Investment Fund: Any fund established in accordance with the provisions of this decision and the instructions issued pursuant thereto.

Article (3): This decision aims to regulate the establishment and operation of investment funds and the provision of financial services related thereto. It also aims to protect investors and ensure the integrity and transparency of the financial market.

Article (4): This decision shall apply to all investment funds and financial services related thereto, including:

• Fund management.
• Investment advisory services.
• Marketing and distribution of fund units. And based on the Board of Directors Decision No. (5174) dated 16/8/2012, published in the Official Gazette No. (3756), regarding the instructions for regulating investment funds and financial services. And Board of Directors Decision No. (2) of 2013 regarding the instructions for regulating investment funds, published in the Official Gazette No. (5268) dated 2/2/2014, page (683). And based on the recommendations of the technical committee.
• The capital of the fund manager must be (10%) of the total assets under management, provided it is not less than the amount specified by the Authority.
• The Authority shall issue instructions regarding the licensing of fund managers and the supervision of their activities, effective from 1/7/2014. These instructions shall include provisions related to the qualifications of fund managers, their organizational structure, internal control systems, and risk management. The Authority shall also specify the types of financial services that fund managers may provide and the conditions for providing them. The Authority shall publish these instructions in the Official Gazette.
• The Authority shall establish a register of fund managers and financial service providers, which shall be publicly accessible. The Authority shall also publish a list of licensed persons on its website and in the Official Gazette.

Article (5): The Authority shall issue instructions regarding the licensing of persons engaged in the business of establishing investment funds or providing financial services related thereto, including:

• The conditions for obtaining a license, including the qualifications of the applicant, their financial solvency, and their experience in the field of investment funds and financial services.
• The procedures for submitting a license application and the documents required. The Authority shall publish these instructions in the Official Gazette, and they shall include provisions related to the obligations of licensed persons, including compliance with codes of conduct, internal control systems, and risk management, and the Authority shall specify the types of financial services that licensed persons may provide and the conditions for providing them.

Article (6): The Authority shall issue instructions regarding the supervision and control of investment funds and financial services related thereto, including:

• The requirements for the establishment and operation of investment funds, including their legal form, capital, and investment policies.
• The obligations of investment fund managers, including their duties to investors, their reporting requirements, and their internal control systems.
• The Authority shall publish these instructions in the Official Gazette.

Article (7): The Authority shall publish all instructions issued pursuant to this decision in the Official Gazette.

Article (8): Any person who violates the provisions of this decision or the instructions issued pursuant thereto shall be subject to the penalties stipulated in the Capital Market Authority Law and the Law on Regulating Financial Markets. The Authority may also impose administrative penalties, including, but not limited to: a warning, a fine not exceeding (75%) of the value of the violation, suspension or revocation of the license, and prohibition from engaging in financial activities for a specified period. The Authority shall publish the names of persons who have violated the provisions of this decision or the instructions issued pursuant thereto on its website and in the Official Gazette.

Article (9): The Chairman of the Board of Directors shall be responsible for implementing the provisions of this decision. Issued by the Board of Directors.