Capital Markets Authority

Capital Markets Authority Board of Directors Resolution No. 52 of 2023

Dated March 8, 2023

Regarding the Rules for Registration and Deregistration in the Authority's Registry for Entities Required by Investment Funds to Trade Metals

The Board of Directors of the Capital Markets Authority After reviewing Law No. 95 of 1992 establishing the Capital Market and its executive regulations; and Law No. 10 of 2009 regulating supervision over non-banking financial markets and instruments; and Prime Minister's Resolution No. 182 of 2020 licensing the establishment of the Egyptian Commodity Exchange Company; and the Authority's Board of Directors Resolution No. 71 of 2021 regarding rules for investment funds' trading in metals as a type of movable financial asset; and after the Authority's Board approval at its session held on March 8, 2023;

RESOLVED:

(Article One)

A registry shall be established within the Authority for entities required by investment funds to trade metals as a type of movable financial asset, and the registry must include at minimum the following information and data:

• 1. The entity's name, legal form, and purpose.
• 2. Its main center address and operational headquarters.

(Article Two)

The entity seeking registration in the registry referred to in Article One of this Resolution must meet the following conditions:

• 1. Adopting one of the company forms stipulated in Law No. 159 of 1981 regarding joint stock companies, partnerships limited by shares, limited liability companies, and single-person companies.
• 2. Having a capital of no less than the threshold determined by the Authority's Board, which shall not be less than five million Egyptian pounds.
• 3. Having the trading of metals (buying and selling) as one of its purposes.
• 4. Having operated the activity for a minimum of two years preceding the registration application submission.
• 5. Holding a license from the competent authorities to engage in buying and selling metals.
• 6. Being among the member entities of the Egyptian Commodity Exchange within Category A trading companies that trade metals for their own account or on behalf of clients as intermediaries.
• 7. Being a member of one of the relevant professional unions, associations, or chambers.
• 8. Having founders, board members, and chief executive officers of good repute and character.
• 9. Paying the service fee referred to in Article Five of this Resolution.

(Article Three)

The registration application shall be submitted using the form approved by the Authority for this purpose, accompanied by documents evidencing the conditions stipulated in Article Two of this Resolution, along with the following additional documents:

• 1. A copy of the preliminary contract and the company's articles of association.
• 2. A recent extract from the company's commercial registry.
• 3. The company's shareholder structure.
• 4. If the company is owned, affiliated in ownership or management with other companies/entities, or supervised by them, a statement detailing ownership percentages and relationships, including names of related persons and entities, their financial and functional ties to the entity, along with a statement on the shareholder structure of the affiliated entity/entities, its board members, and legal representatives.
• 5. A certificate from the Central Depository and Clearing Company confirming the deposit of the applying company's securities with it.
• 6. A copy of the company's premises occupancy deed.
• 7. A statement detailing the company's board members and chief executive officers, along with their experience.
• 8. The work procedures manual and internal audit and control systems, along with the manual for anti-money laundering, combating terrorism financing, and proliferation financing.
• 9. A statement from the company's legal representative regarding technical infrastructure components, availability of connection to an Authority-approved and announced metal pricing service, and work, storage, and secure backup systems for all data.
• 10. The company's approved financial statements for the last financial period preceding the registration application submission.
• 11. A statement confirming the absence of criminal or misdemeanor convictions for offenses involving honor or trust, or under financial non-banking laws, the Central Bank and Banking Authority Law, AML Law, or Commercial Law, or bankruptcy declarations, against the company's founders, board members, or service providers within the five years preceding the application, unless their reputation has been restored.

(Article Four)

A committee comprising legal and technical elements, including field and desk inspectors, shall be formed by the Authority's Chairman to verify compliance with the required conditions and documents for registration. The Authority shall issue its decision on the registration application within a period not exceeding fifteen days from the date of fulfilling registration requirements.

(Article Five)

The registration term in the registry shall be three years and may be renewed for similar periods, provided that a renewal application is submitted within the three months preceding the expiration of the registration term. Renewal requires compliance with and continuation of the conditions required for initial registration. The service fee for examining and studying the registration or renewal application shall be twenty-five thousand Egyptian pounds.

(Article Six)

Registered entities shall observe the following:

• 1. Compliance with all decisions and instructions issued by the Authority on this matter.
• 2. Providing an insurance policy issued by a licensed insurance company, valid for its benefit throughout the contract period, covering risks related to transportation and shipping, in cases where the entity transports metals according to the agreement with the fund. The contract between the entity and the fund must specify the compensation amount payable to the fund if the insured risk materializes concerning the fund's assets.
• 3. Avoidance of conflicts of interest with related parties.
• 4. Notifying the Authority of investment funds with which it trades, immediately upon contracting with them.

(Article Seven)

The Authority's Board of Directors may, in the event that one or more registration conditions are lost or not maintained, take one or more of the following measures:

• 1. Issuing a warning regarding attributed violations and specifying the time period required to remove their causes.
• 2. Temporary suspension of registration for a period not exceeding one year.
• 3. Deregistration from the registry, with no re-registration allowed until at least one year has passed.
     In the event that any of the measures stipulated in clauses (2) and (3) of this Article are taken, the decision issuing such measures must include the procedures to be complied with regarding this matter.

(Article Eight)

This Resolution shall be published in the Egyptian Gazette and on the Authority's electronic website, and shall take effect from the day following its publication in the Egyptian Gazette.

Board of Directors Chairman
Capital Markets Authority
Dr. Mohamed Farid Saleh