Board of Directors Decision No. 32 of 2021 dated 2021/3/21

Issuing the Bylaws of the Investor Protection Fund against Non-Commercial Risks

The Board of Directors of the Financial Regulatory Authority

Having reviewed the Capital Market Law issued by Law No. (95) of 1997; And the Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; And the Prime Minister's Decision No. (2339) of 2019 reorganizing the insurance fund for participants against non-commercial risks regarding the activities of companies listed with securities or financial instruments on Egyptian stock exchanges or operating in the field of securities and financial instruments; And the Board of Directors Decision No. (46) of 2016 regarding the issuance of the Bylaws of the Investor Protection Fund; And the proposal submitted by the Fund; And after approval by the Board of Directors in its session held on 2021/3/21;

Decided

(Article One)

The provisions of the Bylaws of the Investor Protection Fund against Non-Commercial Risks attached to this Decision shall be applied.

(Article Two)

Board of Directors Decision No. (46) of 2016 regarding the issuance of the Bylaws of the Investor Protection Fund is repealed.

(Article Three)

This Decision shall be published in the Egyptian Official Gazette and on the websites of the Authority, the Egyptian Exchange, and the Fund, and shall be enforced from the day following its publication in the Egyptian Official Gazette.

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Chairman of the Board of Directors Dr. Mohamed Omran

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Financial Regulatory Authority FINANCIAL REGULATORY AUTHORITY

Smart Village, Building 136, Giza, Egypt Postal Code: 110 Telephone: +202 3534530 Fax: +202 35370036 WWW.FRA.GOV.EG

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Building Bridges not Walls نبني الجسور لا الحواجز

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Bylaws of the Investor Protection Fund against Non-Commercial Risks

(Chapter One)

Definitions and General Provisions

(Article 1)

In applying the provisions of these Bylaws, the following words and expressions shall have the meanings indicated alongside each:

• 1- The Authority: The Financial Regulatory Authority.
• 2- The Fund: The Investor Protection Fund against Non-Commercial Risks regarding the activities of companies listed with securities or financial instruments on Egyptian stock exchanges or operating in the field of securities and financial instruments.
• 3- The Fund Regulatory Decision: Prime Minister's Decision No. (2339) of 2019 reorganizing the insurance fund for participants against non-commercial risks regarding the activities of companies listed with securities or financial instruments on Egyptian stock exchanges or operating in the field of securities and financial instruments.
• 4- Member: Companies listed with securities or financial instruments on Egyptian stock exchanges, and companies operating in the field of securities and financial instruments, or either of them as applicable.
• 5- Client: A participant in securities and financial instruments through the Fund's members.
• 6- Shareholder: Every owner of shares in the capital of companies listed with securities or financial instruments on Egyptian stock exchanges.
• 7- Notification: Any means of communication between the Member or Client or Shareholder and the Fund or any of its committees or bodies, whether by registered letter with acknowledgment of receipt, by email specified by the Member or Client or Shareholder and agreed upon for communication with the Fund, or by text messages sent to the phone of the Member or Client or Shareholder at the number specified and agreed upon for communication with the Fund.
• 8- Covered Financial Losses: The personal and direct financial losses of the injured client. The coverage does not include any indirect losses or losses resulting from changes in the value of securities or from lost alternative investment opportunities.
• 9- Default: The client's inability to fulfill financial obligations arising from their dealings in securities for their clients' benefit, whether due to reasons beyond their control or reasons related to the mismanagement and deployment of their financial resources.
• 10- Bankruptcy: The final judgment issued by the competent court declaring the bankruptcy of the Member, regardless of the cause of bankruptcy, whether related to its securities activities or for any other reason.

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(Article 11)

Mistake and Negligence: The Member's failure to perform professional duties towards the injured client, manifested in practical procedures, commercial customs, and preventive or precautionary measures, and everything required for the practice of the licensed activity by the Member according to prevailing legal rules and established customs, all according to the results of investigations conducted by the Authority or judicial authorities.

(Article 12)

Fraud and Deception: The Member's use of illegal, untrustworthy, or illegitimate means and methods in dealing with its clients, whether for the purpose of achieving illegal financial gains or for any other purpose, all according to the results of investigations conducted by the Authority or judicial authorities.

(Article 13)

Law: The Capital Market Law issued by Law No. (95) of 1997 and its executive regulations.

(Article 14)

Rules for Listing and Delisting of Securities: Rules issued by the Board of Directors of the Authority regarding the listing and delisting of securities on the Egyptian Exchange.

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(Article 2)

Name and Purpose of the Fund:

The Investor Protection Fund against Non-Commercial Risks is an independent legal entity not aimed at profit, with the purpose of insuring participants in securities against non-commercial risks arising from the activities of companies listed with securities or financial instruments on Egyptian stock exchanges and companies operating in the field of securities and financial instruments.

The Fund may have a direct or indirect interest or participate in any manner with entities conducting similar activities or competing with it to achieve its goals and objectives in the Arab Republic of Egypt, subject to the Authority's approval.

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(Article 3)

Headquarters of the Fund:

The Fund's headquarters and main center shall be at the property located at No. 70 El Gomhoreya Street – Cairo.

The Fund's Board of Directors may transfer the Fund's headquarters to one of the neighboring cities or establish other branches in Cairo or other governorates, subject to the Authority's approval.

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(Article 4)

Members of the Fund:

The Fund's membership includes every company listed with securities or financial instruments on Egyptian stock exchanges, and every company or entity licensed to conduct one or more of the following activities:

• 1- Clearing, settlement, deposit, and central registration of securities and financial instruments.
• 2- Formation and management of securities portfolios.
• 3- Management of investment funds.
• 4- Securities brokerage.
• 5- Dealing, intermediation, and brokerage in bonds.
• 6- Custodians.

The Prime Minister, upon the proposal of the Board of Directors of the Authority, may add to the aforementioned activities any other activities issued in implementation of the Law's provisions.

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(Article 5)

Membership Contributions to the Fund:

Without prejudice to the membership of existing companies at the Fund, the membership contribution for companies operating in the field of securities and financial instruments that commence their activity after the effective date of the Fund Regulatory Decision shall be one per thousand (0.001) of the activity volume during the year preceding the commencement of membership, after a minimum of one hundred thousand Egyptian pounds. In the absence of a preceding year on the date of commencement of membership, the accounting shall be based on the aforementioned minimum, and the membership contribution shall be completed if its value lapses according to the company's activity volume during the first year of activity.

The membership contribution for companies listed with securities or financial instruments on Egyptian stock exchanges shall be one per ten thousand (0.0001) of the nominal value of the issued capital of the company, according to the latest annual or periodic financial statements issued by the company's auditor, after a minimum of ten thousand pounds, with a maximum of one hundred thousand pounds. The contribution shall be reduced by 50% for small and medium-sized companies (Nile Exchange), according to the definition provided in the rules for listing and delisting of securities.

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(Article 6)

Periodic Subscriptions:

A member of the Fund from companies operating in the field of securities and financial instruments shall pay the following periodic subscriptions:

• 1- Clearing and settlement in securities transactions and deposit and central registration "2" Two percent of total activity revenues.

• 2- Custodian "5" Five per ten thousand after a maximum of 100 Egyptian pounds annually per client for total cash balances and securities owned by the client and held with the custodian, based on actual balances at the end of December of each year.

• 3- Securities brokerage companies or dealing, intermediation, and brokerage companies in bonds "5" Five per ten thousand of the transaction value recorded on the invoice after a maximum of five thousand pounds or its equivalent in foreign currencies.

• 4- Securities portfolio formation and management companies "5" Five per ten thousand after a maximum of one thousand pounds annually per company.

• 5- Investment fund management companies "5" Five per ten thousand after a maximum of 1000 pounds from the net asset value of each fund managed by the company, calculated at the end of December of each year based on the annual financial statements of each fund, and paid within two weeks of the issuance of the financial statements.

The Fund's Board of Directors may, based on a study of market conditions, market value indicators, trading, non-commercial risk assessment, and available funds, propose amendments to the periodic subscriptions, which require the approval of the Board of Directors of the Authority, the endorsement of the Prime Minister, and publication in the Official Gazette to take effect.

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(Article 7)

Deadlines and Methods for Paying Membership Contributions and Periodic Subscriptions:

The Fund's member is obliged to pay the membership contribution within one month at the latest from the date of notification by the Fund to pay it.

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(Article 8)

Failure to Pay Membership Contributions or Periodic Subscriptions on Time:

In the event of the member's delay or refusal to pay the membership contribution or periodic subscriptions within the specified deadlines, they shall be notified and ordered to fulfill the obligation by the Fund via a registered letter with acknowledgment of receipt or hand delivery. If the member does not pay within fifteen days from the date of the order, a daily delay fee shall be calculated based on the credit and discount rate announced by the Central Bank of Egypt, plus three percentage points annually, from the day following the specified payment deadline.

In the event of delay or refusal to pay for thirty days or more from the date of the order to fulfill, the Authority shall be notified to consider taking appropriate action against the violating member. The Egyptian Exchange and the Deposit and Central Registration Company shall also be notified to implement their respective matters.

The Fund's Board of Directors may publish a disclosure of violating members on the Fund's website or any other media approved by the Authority.

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(Chapter Two)

Management of the Fund

(Article 9)

Board of Directors of the Fund:

The Fund's management is vested in a Board of Directors formed by the Prime Minister upon the proposal of the Chairman of the Authority, consisting of nine members, selected as follows:

• 1- A representative of investors in Egyptian stock exchanges, chosen by the Prime Minister upon the nomination of the Chairman of the Authority.
• 2- Three members representing companies that are members of the Fund, elected according to rules and procedures issued by a decision of the Board of Directors of the Authority, as follows: (a) One member representing securities brokerage companies. (b) One member representing companies operating in the field of securities and financial instruments other than brokerage companies. (c) One member representing companies listed with securities or financial instruments on Egyptian stock exchanges.
• 3- A representative of the Egyptian Exchange, chosen by the Chairman of its Board of Directors.
• 4- A representative of the Deposit and Central Registration Company for Securities, chosen by the Chairman of its Board of Directors.
• 5- Three members of expertise chosen by the Board of Directors of the Authority.

The term of office for the members referred to in items (1, 2, 5) shall be three years, renewable only once.

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(Article 10)

Powers of the Board of Directors:

The Fund's Board of Directors is responsible for applying the provisions of the Prime Minister's Decision regulating the Fund and taking necessary measures to achieve its goals, including specifically:

• 1- Proposing the Fund's Bylaws or amending them, subject to a decision by the Board of Directors of the Authority.
• 2- Approving the financial, administrative, and personnel regulations, the organizational structure of the Fund, and the job descriptions of Fund employees.
• 3- Approving the Fund's annual and quarterly financial statements and its draft budget.
• 4- Taking measures to ensure the safety and preservation of the Fund's assets and funds.
• 5- Approving asset management and investment policies, ensuring due care in managing investment risks, maintaining appropriate liquidity to meet client compensation requests, and periodically monitoring the performance of the Fund's portfolio.

The Fund's Board of Directors shall establish a code of conduct for its board members and employees, including rules for conducting business, confidentiality, governance controls, and avoidance of conflicts of interest, subject to approval by the Board of Directors of the Authority.

The Fund's Board of Directors may form one or more committees from among its members to perform specific tasks related to its powers, meeting upon invitation from the Chairman of the Fund's Board of Directors or its Executive Director.

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(Article 11)

Meetings of the Fund's Board of Directors:

• 1- The Fund's Board of Directors shall meet at its main headquarters at least once every two months upon invitation from its Chairman. The Board may convene outside the Fund's main headquarters, provided it is within the Arab Republic of Egypt. The Board may also hold its meetings using secure visual or audio communication means or through any other electronic voting system approved by the Authority.
• 2- The Fund's Board of Directors shall not be validly convened unless two-thirds of the members are present, including its Chairman. Decisions shall be issued by an absolute majority of the attending members. In case of a tie, the Chairman's vote shall prevail.
• 3- The Chairman of the Fund's Board of Directors may invite experts to attend Board meetings without voting rights.

The Chairman of the Authority may invite the Fund's Board of Directors to convene to discuss specific matters.

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(Article 12)

Minutes of the Fund's Board of Directors Meetings:

Minutes of the Fund's Board meetings shall be prepared, recording attendance and a comprehensive summary of the Board's discussions and decisions. The minutes shall be presented for ratification at the next Board session. Board meeting minutes shall be regularly recorded in a special register, signed by the Chairman of the session and the Secretary.

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(Article 13)

Executive Director of the Fund:

The Fund's Board of Directors, upon the proposal of the Chairman and with Board approval, shall appoint an Executive Director for the Fund, responsible for managing the Fund's executive and administrative apparatus, with their financial remuneration determined, subject to notifying the Authority of their expertise and qualifications.

The Executive Director shall perform their duties under the supervision of the Chairman of the Fund's Board of Directors and shall be invited to attend Board meetings and its committees without voting rights.

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(Chapter Three)

Rules for Benefiting from Fund Protection

(Article 14)

Scope of Protection Provided by the Fund:

The Fund covers the actual financial loss of its members' clients from companies operating in the field of securities and financial instruments against non-commercial risks arising from the Member's activity in securities listed in the Egyptian Exchange's table. The coverages include the following risks:

(a) Bankruptcy of a Fund member by a final or interim judgment, with the state of interim judgment and its start determined by a decision issued by the Fund's Board of Directors according to the report issued by the Authority on this matter. (b) Mistake, negligence, fraud, or deception by the Member or its legal representative, de facto manager, or employees, whether alone or in collusion with others, according to the results of investigations conducted by the Authority or judicial authorities.

The Fund also covers non-commercial risks for shareholders of members from companies listed with securities or financial instruments on Egyptian stock exchanges, guaranteeing the subscription right if delisted early. This includes risks arising from the following:

(a) Bankruptcy of a Fund member by a final judgment, or the issuance of final judgments in favor of owners of securities or financial instruments. (b) Mandatory delisting of the Member's securities or financial instruments from Egyptian stock exchange tables, resulting from a final decision by the Exchange's administration generally regarding the rules for listing and delisting securities, except those beyond the Member's control, provided the mandatory delisting results from the Member's management's negligence or mistake, including if listing was based on misleading data or forged documents, without prejudice to the Fund's right of recourse against the delisted party in all cases for any other reason deemed appropriate by the Authority.

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(Article 15)

Uncovered Risks:

The Fund is not obliged to compensate for the following risks:

• 1- Any claim arising from any act, mistake, omission, operation, or event related to any operations executed on securities listed outside the Arab Republic of Egypt.

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(Article 16)

Scope of the Fund's Jurisdiction:

The Fund's jurisdiction does not include compensation for incidents preceding its establishment date of 4/11/2004. Nor does the Fund's jurisdiction include compensation for any damages related to securities not listed in the Egyptian Exchange's table.

The date of the incident or incidents in question shall always be considered when determining the compensation value with all its elements.

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(Article 17)

Coverage Unit:

The coverage unit shall be a maximum of five hundred thousand pounds per client or per owner of freely tradable securities or financial instruments, as applicable. Compensation for a Member's client from companies and entities operating in the field of securities and financial instruments includes the securities and financial instruments the client deals with at the Member, as well as the credit cash balance in the account resulting from the client's dealings in securities and financial instruments at the Member, not exceeding one hundred thousand pounds.

The Fund's Board of Directors may, based on available funds and after conducting necessary studies, prepare a draft amendment to the coverage unit. This amendment shall not take effect until approved by the Board of Directors of the Authority, endorsed by the Prime Minister, and published in the Official Gazette.

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(Article 18)

Coverage Rules:

• 1- Compensation paid to the Member or client shall not exceed the membership contribution or the client's share thereof, except in one case for 10% of available resources according to the latest annual or periodic financial statements issued by the Fund's auditor, provided that total compensation paid during the financial year from Fund revenues from periodic subscriptions does not exceed available amounts. In case the requested coverage value exceeds available amounts, the available amounts shall be distributed among all clients and shareholders of the Member, each separately, according to controls set by the Fund's Board of Directors.

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(Article 19)

• 2- The Fund may compensate clients of its members from companies operating in the field of securities and financial instruments by purchasing the same securities and financial instruments at the value of the compensation due to them from the Fund, according to rules issued by a decision of the Fund's Board of Directors.
• 3- The Fund is obliged to compensate shareholders of the Member owning securities and financial instruments with an amount equivalent to the average trading price during the three months in which the security or financial instrument was traded. Compensation in the absence of trading on the security or financial instrument shall be according to the fair value determined by an independent financial advisor chosen by the Authority from its registry, after the Fund pays their remuneration.
• 4- The Fund is not obliged to compensate for any financial losses resulting from changes in the market value of the client's securities and financial instruments or resulting from loss, failure, or errors in investing their funds with companies operating in the field of securities and financial instruments.

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(Article 20)

Rules and Procedures for Submitting Compensation Requests:

First: Compensation Request and Supporting Documents

• 1- The compensation request must be submitted by the Member's client or shareholder, containing the required data and supporting documents, and the procedures entitling compensation.
• 2- Compensation requests must indicate that investigations have been conducted on the request by the Authority or one of the judicial authorities – if any – and the Fund must approve the results of these investigations.
• 3- The client or shareholder's submission of the compensation request, and the client's notification to the Authority or the Fund's request to submit investigation requests, shall interrupt the deadlines stipulated in these Bylaws.
• 4- A complaint from a client or shareholder of the Member shall not be accepted after three years have passed since the incident in question, unless the client has taken judicial action against the company or submitted a complaint to the Authority within this period.

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(Article 21)

Organization:

• 1- Each party may appeal the decision issued by the Compensation Committee of the Fund before the Fund's Board of Directors within fifteen days, specifying the subject and grounds in the appeal, and attaching supporting documents. The appeal and its attachments must be in original and copy.
• 2- The competent official shall endorse a copy of the appeal indicating receipt, specifying the registration number and date of receipt, and delivering this copy to the appellant.
• 3- The Fund's Board of Directors shall rule on the appeal within ten days from the date of its submission, provided it includes the necessary documents for ruling.
• 4- The client or shareholder of the Member shall be notified of the Fund's Board of Directors' decision within three working days from the date of its issuance.
• 5- Any party claiming an interest may object to the Fund's Board of Directors' decision before the Authority within one month from the date of notification of the decision. The Authority shall rule on the objection within fifteen days from the date of its submission, provided it includes the necessary documents for ruling. The Authority's decision shall be final and binding on both the objector and the Fund.

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(Article 22)

Notification of Crimes:

If the Fund determines, while reviewing a compensation request submitted by a client or shareholder of the Member, that the Member committed a crime punishable by law, the Fund must immediately notify the Authority.

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(Chapter Four)

Financial and Administrative System of the Fund

(Article 23)

Fund Resources:

The Fund's resources consist of the following:

• 1- Membership contributions and periodic subscriptions prescribed for the Fund by its members and any late payment fees due thereon.
• 2- Loans, grants, and donations approved by the Fund's Board of Directors, subject to notifying the Authority thereof.

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(Article 24)

Fund Accounts:

The Fund shall have special accounts at commercial banks registered with the Central Bank of Egypt, into which the Fund's funds and resources shall be deposited.

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(Article 25)

Rules for Investing Fund Resources:

The Fund is obliged to invest its funds in the following areas:

• 1- Egyptian deposits, certificates of deposit, and investment certificates.
• 2- Government bonds and treasury bills.
• 3- Bonds and sukuk issued by companies and public entities, provided their credit rating is not less than BBB-.
• 4- Open-end investment funds that conduct investment activities in money markets or investment in debt instruments and other negotiable securities.

The Fund's Board of Directors must prepare a study on the maximum limits for the Fund's investments in items (4, 3) of this Article, relative to the issuance size and the Fund's portfolio size, subject to prior approval by the Board of Directors of the Authority.

The Fund may, with the Authority's approval, deal in securities listed on the Egyptian Exchange with up to 10% of available funds. The Fund's Board of Directors shall put in place the necessary executive procedures and controls for this, subject to prior preparation and approval by the Board of Directors of the Authority.

In all cases, the Fund is not allowed to do any of the following:

• 1- Establish companies, taking into account the Fund's existing membership in the Egypt Future Investment Fund company.

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(Article 26)

• 2- Own real estate assets other than those necessary for operational needs only, subject to approval by the Board of Directors of the Authority based on justifications and feasibility of owning the proposed real estate asset.

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(Article 27)

Awareness of Participants in the Securities Market:

The Fund may invest part of its surplus funds, not exceeding 1% of the volume of available funds according to the latest approved financial statements, in areas aimed at protecting and raising awareness among participants in the securities market and achieving prior prevention. The determination of these areas and approval of their budget shall be subject to approval by the Fund's Board of Directors.

The aforementioned areas include the following:

• 1- Bearing the cost of awareness or awareness campaigns regarding capital market activities or part of this cost.
• 2- Bearing part of the cost of members' clients' subscriptions to text messages regarding monitoring their dealings in securities.
• 3- Bearing part of the cost of programs and others related to protection from information technology risks and database breaches for Fund members, including alternative lines and hosting costs at an alternative location for data and information storage.
• 4- Bearing part of the cost of upgrading or recruiting risk managers and internal auditors to achieve prior prevention of risks faced by members' clients and working to avoid violating rules.
• 5- Financing part of the cost of training Fund members' employees regarding internal, financial, and governance monitoring, and courses organized by the Financial Services Institute or other entities approved by the Authority.

In all cases, the Fund must conduct an annual study on awareness areas, expenditure types, and estimated costs, and inform the responsible Authority. The Fund must adhere to the following:

(a) Ensuring conditions for benefiting from these programs serve the relevant Fund members and achieve equal opportunity. (b) Ensuring prior announcement of these programs on the Fund's website well in advance of their implementation.

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(Article 28)

Fund Registers:

The Fund must keep paper and/or electronic registers and files that help it achieve its goals, specifically:

• 1- Member Register: Including at least the names of members, date of membership, and identification or biographical data of members.
• 2- Each Member's File: Including documents and papers related to membership and important correspondence between the member and the Fund.
• 3- Claims Register: Including a section for claims from each member's client, including at least: the date and value of the claim, the client's name, address, estimated compensation, and date of payment, and other sufficient data and information to obtain accurate compensation data and statistics.
• 4- Appeals Register: Including appeals submitted to the Fund's Board of Directors, recording at least: the appeal data and the party against whom it is filed, the date of submission, its subject, the Board's decision regarding it, and its date.

These paper and/or electronic registers and files must be kept for at least ten years from the date of registration therein or until a final judgment is issued regarding a dispute over the data or information contained therein, whichever is longer.

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(Article 29)

Internal Control:

The Fund's management is obliged to establish an internal control system for the Fund's management activities, its committees, and its employees, ensuring the proper application of laws, decisions, and procedures organizing the Fund's work and its internal regulations. The internal audit unit system within the Fund must ensure the freedom and independence of auditing. Their tasks and reports of this unit shall be presented to the Executive Director for approval and then to the Fund's Board of Directors, which shall present them to the Board of Directors.

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(Article 30)

Account Monitoring:

The Fund's accounts shall be monitored by two auditors appointed and whose remuneration is determined by a decision of the Board of Directors of the Authority.

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(Article 31)

Periodic Reports:

The Fund must prepare the following reports:

• 1- Annual Report: Covering the Fund's activities, submitted to the Authority and published on the Fund's website.
• 2- Semi-annual Reports: Including a summary of claims from clients or shareholders of members, indicating the volume of compensation paid by the Fund during the period covered, submitted to the Authority.

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(Article 32)

Publication:

The Fund is obliged to publish its annual and periodic financial statements, the auditor's report, and supplementary explanations via its website on the Internet within three working days at most from the date of notification by the Authority.

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(Article 33)

Disclosure:

The Fund is obliged to prepare