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2021-01-01

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Board of Directors Decision No. (8) of 2021 dated 31/1/2021 regarding the conditions and procedures for licensing the activities of Central Depository and Central Registration of Government Securities and Financial Instruments

The Financial Regulatory Authority (FRA) of Egypt issued Board Decision No. (8) of 2021 to establish the mandatory conditions and procedural requirements for licensing companies to conduct central depository and central registration activities for government securities and financial instruments. The decision mandates a minimum paid-up capital of 50 million Egyptian pounds, restricts the corporate purpose to these specific activities, and requires qualified board members, a Managing Director with at least ten years of relevant financial experience, and a minimum organizational structure comprising clearing, finance, risk management, and internal audit departments. Furthermore, it outlines the application submission process, mandates compliance with corporate governance and anti-money laundering regulations, and stipulates a 100,000 Egyptian pound licensing fee alongside a thirty-day review period for complete applications.

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FINANCIAL REGULATORY AUTHORITY FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Board of Directors Decision No. (8) of 2021 dated 31/1/2021 regarding the conditions and procedures for licensing the activities of Central Depository and Central Registration of Government Securities and Financial Instruments

The Board of Directors of the Financial Regulatory Authority After reviewing:

  • Capital Market Law issued by Law No. (95) of 1992;
  • Central Depository and Registration of Securities and Financial Instruments Law issued by Law No. (93) of 2000;
  • Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments;
  • Board Decision No. (53) of 2018 regarding licensing conditions, renewal, and share ownership rules for companies operating in non-banking financial activities;
  • Board Decision No. (100) of 2020 regarding corporate governance rules for companies in non-banking financial activities;
  • Board Decision No. (126) of 2020 regarding ownership structure conditions for companies conducting central depository and registration activities for government securities and financial instruments, and conditions for forming their boards of directors;
  • Board Decision No. (2) of 2021 regarding supervisory controls for anti-money laundering and counter-terrorist financing for entities in non-banking financial activities;
  • Board Decision No. (3) of 2021 reorganizing registration, renewal, and deregistration conditions for auditors in the Authority's register; And after approval by the Board of Directors in its meeting held on 31/1/2021;

DECIDED (Article One) Any company wishing to obtain a license to conduct the central depository and central registration activities for government securities and financial instruments must meet the following conditions:

  1. The company's issued and paid-up capital must not be less than fifty million Egyptian pounds.
  2. The company's purpose must be limited to conducting the central depository and central registration activities for government securities and financial instruments.

Smart Village, Building 136, Giza, Egypt Postal Code 1100 Tel: +202 35370530 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls Building Bridges not Walls

FINANCIAL REGULATORY AUTHORITY FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

  1. The company must have an independent premises dedicated to conducting the activity, equipped with the necessary technological infrastructure, equipment, and information systems to perform the activity in accordance with the requirements specified by the Authority.
  2. Members of the company's board of directors must hold a higher education degree.
  3. The Managing Director of the company must have at least ten years of experience in either banking or non-banking financial work, and must have previously held a supervisory position at an appropriate level in a banking or non-banking financial institution.
  4. The company's organizational structure must include at minimum the following executive departments:
  • Departments responsible for clearing, settlement, depository, and central registration activities.
  • Finance Department.
  • Risk Management Department.
  • Internal Audit Department. The managers of the aforementioned departments must have suitable practical experience of no less than seven years in the company's fields of work.
  1. The individuals referred to in items (5) and (6) must pass the personal interviews conducted by the Authority for this purpose.
  2. The company's auditor must be among the auditors registered in the register maintained by the Authority for this purpose, in accordance with the provisions of Board Decision No. (3) of 2021 mentioned above.
  3. Undertake to comply with the corporate governance rules for companies operating in non-banking financial activities and the anti-money laundering and counter-terrorist financing controls issued by the Board of Directors, without prejudice to Board Decision No. (126) of 2020 mentioned above.
  4. No final judgments convicting members of the company's board of directors or its senior managers of a felony, or a misdemeanor involving an offense against honor or trust, or of any of the serious crimes stipulated in the laws regulating non-banking financial activities, the Central Bank and Banking System Law, or the Anti-Money Laundering Law, during the five years preceding the license application, unless their reputation has been restored (1).

(1) For the purpose of applying the provisions of this Decision, "serious crimes" refers to crimes punishable by imprisonment or a fine with a maximum penalty of no less than five hundred thousand Egyptian pounds under any of the laws regulating non-banking financial activities, the Central Bank and Banking System Law, or the Anti-Money Laundering Law.

Smart Village, Building 136, Giza, Egypt Postal Code 1100 Tel: +202 35370530 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls Building Bridges not Walls

FINANCIAL REGULATORY AUTHORITY FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

  1. Payment of the licensing fee amounting to one hundred thousand Egyptian pounds.

(Article Two) The application for a license to conduct the activity must be submitted on the form prepared by the Authority for this purpose, accompanied by documents supporting compliance with the conditions stipulated in Article One of this Decision, in addition to the following documents:

  1. A declaration from the company's legal representative confirming that the company possesses the technical capabilities, information systems, risk management mechanisms, and a complaint examination system.
  2. A declaration from the Managing Director stating that they are responsible for the actual management of the company and are fully dedicated to this role, as well as declarations from the managers of the departments mentioned in Article One of this Decision confirming their full dedication to their work at the company. The Authority shall issue a receipt certificate to the license applicant company upon submission of the complete required documents, and shall rule on the license application within thirty days from the date of submission of the application with all required documents.

(Article Three) Without prejudice to Board Decision No. (126) of 2020 mentioned above, the provisions of Board Decision No. (53) of 2018 regarding licensing conditions, renewal, and share ownership rules for companies operating in non-banking financial activities shall apply to matters not specifically addressed in this Decision.

(Article Four) 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 Dr. Mohamed Omran

Smart Village, Building 136, Giza, Egypt Postal Code 1100 Tel: +202 35370530 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls Building Bridges not Walls

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