Chapter Twelve: Investment Funds and Money Markets

First: Investment Funds

Article 173 of the Executive Bylaw of Law No. 95 of 1992, as amended by Article 209 of Minister of Investment Decision No. 2007 of 2007, stipulates that banks or investment companies may, with the prior approval of the Central Bank of Egypt or the Egyptian Authority for Financial Supervision, establish one or more investment funds under the same entity, subject to the specific controls set by the competent authority. The assets and values of these funds must be separate from the assets and values of the bank or investment company establishing them. The assets and values of each fund must be independent from the assets and values of other funds established by the same entity, and the bank or investment company must maintain separate accounting records for each fund.

The entity establishing the fund must ensure that the fund's operations comply with the laws, bylaws, and executive regulations issued by the competent authority, and must take all necessary measures to ensure the fund's compliance with these regulations.

In addition to the powers granted to the Minister of Investment by Article 173 of the Executive Bylaw of Law No. 95 of 1992, the Minister of Investment is authorized to take the necessary measures to implement the provisions of this Bylaw, including the issuance of executive decisions and regulations.

Second: Money Market Funds and Some Specific Controls for Fixed Income Funds 1

In addition to the powers granted to the Central Bank of Egypt to supervise and ensure the implementation of the laws and regulations governing the activities of banks and financial institutions, the Central Bank of Egypt has issued Decision No. 126 of 2008 (as amended) by the Minister of Investment, in conjunction with Law No. 95 of 1992 and the executive regulations issued thereunder.

1. The Central Bank of Egypt reserves the right to issue decisions regarding the establishment of money market and fixed income funds, subject to the approval of the Central Bank of Egypt, in accordance with the following specific controls:

-1 The Control Committee:

The establishment of a Control Committee within the investment company establishing the fund is mandatory, composed of independent experts from the field of investment, appointed by the Board of Directors of the investment company, and its functions are as follows:

• Evaluating the investment risks of the fund in light of the risks of other funds.
• Ensuring the existence of appropriate risk management systems.
• Ensuring the implementation of the investment and strategic policies of the fund in accordance with the laws and regulations.
• Ensuring compliance with the laws and regulations governing money market and fixed income funds.
• Evaluating the risks of the fund's investments.
• Ensuring the adequacy of the net asset value (NAV) calculation controls.
• Ensuring the adequacy of accounting and audit systems within the fund.
• Issuing recommendations regarding the necessary corrective actions.
• Reviewing the fund's reports related to financial and operational performance.
• Ensuring the existence of effective communication between the bank and the fund established by it, and verifying the accuracy of the data.
• Ensuring the adequacy of the qualifications of the committee members, in light of the expertise required for fund risk assessment.

-2 The Central Bank of Egypt must grant its approval for the appointment of the members of the Control Committee.

-3 The Central Bank of Egypt may reject the appointment of any member who does not meet the qualifications required.

-4 The investment company establishing a money market or fixed income fund must inform the Central Bank of Egypt in writing of any changes to the members of the Control Committee within fifteen days of such changes, and the Central Bank of Egypt must grant its approval for the new members.

-5 Specific Controls for Money Market Funds and Fixed Income Funds

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In light of the Central Bank of Egypt's desire to protect investors' funds, and in light of the funds owned by the bank, and in response to the need for a specific framework for money market and fixed income funds, the following controls are established:

First: The bank's exposure to money market funds must not exceed 2% of the bank's Capital or Equity.

Second: The bank's exposure to fixed income funds must not exceed 2.5% of the bank's total deposits in local currency (instead of 5%) and/or five times the limit of the bank's share in the total money market funds (the additional models remaining subject to the 2% Capital or Equity limit).

Executive Decision No. 18 of September 2012 regarding the exposure limit II (Any Limit), in conjunction with Law No. 95 of 1992 and its executive bylaws, and Article 150 of the aforementioned laws, is hereby amended as follows:

Third: The Central Bank of Egypt must ensure that the bank's shareholders are only:

5. Implementing Know Your Customer (KYC) procedures to verify the identity of these shareholders.

Fourth: The bank must distribute the profits of the fund to its beneficiaries, whether they are local or foreign investors, within fifteen days from the date of the fund's profit distribution.

1. The Central Bank of Egypt reserves the right to issue decisions regarding the establishment of money market and fixed income funds, subject to the approval of the Central Bank of Egypt, in accordance with the following specific controls:

2. The Central Bank of Egypt reserves the right to issue decisions regarding the establishment of money market and fixed income funds, subject to the approval of the Central Bank of Egypt, in accordance with the following specific controls:

3. The additional models remaining subject to the Executive Decision No. 18 of September 2012 regarding the exposure limit II.

4. Letter from the Deputy Governor of the Central Bank of Egypt dated January 11, 2016.

5. Letter from the Governor of the Central Bank of Egypt dated December 8, 2014.

Minister of Investment Decision No. 126 of 2008 Amending some provisions of the Executive Bylaw of Capital Market Law No. 95 of 1992 Issued by Decision of the Minister of Trade and Foreign Trade No. 135 of 1993

(Article One)
The text of Article 173 of the Executive Bylaw of Law No. 95, as amended by Minister of Investment Decision No. 135 of 1993, is replaced by the following text:

"Banks or investment companies establishing money market funds must invest the funds established by them in the following instruments:

• Government treasury bills.
• Certificates of deposit issued by banks.
• Commercial paper issued by companies.
• Bankers' acceptances.
• Repurchase agreements.
• Money market mutual funds.

The Board of Directors of the fund must ensure the liquidity of the fund's assets through the following measures:

-1 The fund's assets must be liquid within fifteen days.
-2 The maturity of the fund's assets must not exceed fifteen days.
-3 The fund's assets must be diversified such that no more than 10% of the fund's assets are invested in any single issuer, except for government treasury bills.

In addition to the government treasury bills, the Board of Directors of the fund must invest the remaining assets in instruments with a rating of at least BBB- from recognized rating agencies."

(Article Two)
The investment company establishing a money market or fixed income fund must inform the Central Bank of Egypt in writing of any changes to the members of the Control Committee within fifteen days of such changes, and the Central Bank of Egypt must grant its approval for the new members.

(Article Three)
This Decision is issued from the date of its publication in the Official Gazette.

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