Capital Markets Authority Board of Directors Decision No. (34) of 2014 (Updated Version in 2019)

Decision of the Board of Directors of the Authority No. (34) dated 12/3/2014 1 Regarding the Investment Guidelines for Real Estate Investment Funds in accordance with the latest amendment dated 19/3/2019

Board of Directors of the Capital Markets Authority Having reviewed the Capital Markets Law No. (95) of 1992 and its Executive Regulations and the amendments thereto; And the Central Bank Deposits and Credit Law No. (93) of 2000 and its Executive Regulations; And Law No. (10) of 2009 concerning the regulation of supervision over non-banking financial markets and instruments; And Decision of the President of the Authority No. (191) of 2009 concerning the rules governing securities markets and their affairs; And Decision of the President of the Authority No. (192) of 2009 approving the Basic Bylaws of the Capital Markets Authority; And the approval of the Board of Directors of the Authority in its meeting dated 12/3/2014; has decided

Article (1)
Real estate investment funds targeting investment in income-generating assets must ensure that the proportion of these assets does not exceed 70% of the fund's total assets.
Income-generating assets include all assets that generate periodic income and do not require sale to realize income, and include the following:
First: Real estate assets owned, constructed, acquired, or developed directly or indirectly, which generate or are expected to generate income whether through leasing, utilization, or operation, whether for residential, tourism, commercial, storage, industrial, or other productive or service activities. Second: Financial assets related to real estate activities that generate income, including the following:

1. Mortgage certificates issued with a financial portfolio for real estate financing.
2. Certificates issued by real estate financing companies and secured by real estate financing loans.
3. Financial shares listed in the securities markets, provided they are issued by companies whose majority of assets are real estate or issued by companies operating in sectors related to real estate development.
4. Shares of non-listed real estate companies, provided that 80% of their assets are real estate, with the condition that the fund's ownership percentage in the company's capital does not exceed two-thirds of its capital at any time.
5. Other real estate investment certificates.
   The prospectus or information memorandum must, in all cases, specify the maximum investment limit for each of the aforementioned categories.
   The fund's investment in demand certificates and treasury bills shall not exceed 30% of the fund's total assets.
   In all cases, the proportion of real estate assets including financial assets related to real estate activities for a real estate investment fund must not exceed 95% of the fund's total assets.

Article (2)
The prospectus or information memorandum must, in all cases, specify the time period for forming the fund's investment portfolio, while adhering to the limits and conditions set forth in Article (1) of this Decision and Article (183) of the Executive Regulations of Capital Markets Law No. (95) of 1992, within a period not exceeding the beginning of the second fiscal year following the fund's establishment, and must also include the following standard clause indicating the fund's commitment thereto.

Article (3)
This Decision shall be published in the Official Gazette and on the Authority's and the Securities Market's electronic websites, and shall take effect from the day following its publication in the Official Gazette.

1. This Decision was amended by Board of Directors Decision No. (1) dated 17/1/2016 and Decision No. (40) dated 19/3/2019.
2. The first and second paragraphs of Article (1) were replaced by Board of Directors Decision No. (40) dated 19/3/2019. Also, Article (2) of this Decision was added, providing that holding companies may be established to engage in the activity of establishing or participating in establishing investment certificate companies, and such activity may not be conducted by the company itself.
3. Article (2) was amended by Board of Directors Decision No. (1) dated 17/1/2016.