FRA Board Decision No. 106 of 2018 on Registration, Renewal, and Deletion of Founders' Agents for Non-Banking Financial Companies

Decision of the Board of Directors of the Financial Regulatory Authority No. (106) of 2018 dated 16/7/2018 regarding the conditions for registration, renewal, and deletion of founders' agents for companies operating in non-banking financial activities in the register of the Financial Regulatory Authority

Last amended on 20/4/2019

The Board of Directors of the Financial Regulatory Authority, Having regard to Law No. (10) of 1981 on supervision and control of insurance in Egypt and its Executive Regulations; And to Law No. (159) of 1981 on joint stock companies, partnerships limited by shares, and limited liability companies and its Executive Regulations; And to the Capital Market Law issued by Law No. (95) of 1992 and its Executive Regulations and decisions issued thereunder; And to the Financial Leasing Law issued by Law No. (95) of 1995 and its Executive Regulations; And to Law No. (93) of 2000 on the Central Depository and Registration of Securities and its Executive Regulations; And to the Real Estate Financing Law issued by Law No. (148) of 2001 and its Executive Regulations; And to the Anti-Money Laundering Law issued by Law No. (80) of 2002 and its Executive Regulations; And to Law No. (10) of 2009 on regulating supervision of non-banking financial markets and instruments; And to Law No. (141) of 2014 on regulating microfinance activities; And to Presidential Decree No. (191) of 2009 on the rules governing the Egyptian Exchange and its financial affairs; And to the Basic System of the Financial Regulatory Authority issued by Presidential Decree No. (192) of 2009; And to Board Decision No. (72) of 2013 on regulatory and supervisory conditions for factoring activities and its amendments; And to Board Decision No. (11) of 2014 on rules for listing and delisting securities on the Egyptian Exchange and its amendments; And to Board Decision No. (135) of 2016 on conditions for acquiring or controlling brokerage firms and investment fund management companies, and regularization rules pursuant to Articles 328 bis and 328 bis (a) of the Capital Market Executive Regulations; And to Board Decision No. (65) of 2017 on conditions for share ownership in companies operating in the securities sector; And to Board Decision No. (53) of 2018 on licensing conditions, continuity, and share ownership rules for companies operating in non-banking financial activities; And to the approval of the Board of Directors in its meeting held on 16/7/2018.

This Decision was amended by FRA Board Decision No. 60 dated 20/4/2019.

DECIDED AS FOLLOWS:

Article 1 The provisions of this Decision shall apply regarding the conditions for registration, renewal of registration, and deletion of founders' agents for companies operating in non-banking financial activities in the register of the Financial Regulatory Authority.

Article 2 Non-banking financial activities that founders' agents deal with at the Authority during establishment and licensing procedures for companies: a. Activities of companies operating in the capital market:

1. Underwriting and promoting securities offerings.
2. Participating in the establishment of companies issuing securities or in increasing their capital.
3. Venture capital.
4. Clearing and settlement in securities transactions.
5. Formation and management of securities portfolios.
6. Investment funds.
7. Management of investment funds.
8. Securities brokerage.
9. Trading, intermediation, and brokerage in bonds.
10. Securitization of financial rights.
11. Financial advisory services for securities.
12. Market maker.
13. Management services for investment funds.
14. Valuation, classification, and rating of securities.
15. Publishing information on securities.
16. Valuation and analysis of securities.
17. Factoring.
18. Direct investment companies. In addition to activities added by a decision from the competent Minister following the Authority's Board approval.

b. Activities of companies operating in the insurance sector:

1. Insurance and reinsurance.
2. Insurance and reinsurance intermediation.
3. Insurance advisory expertise.
4. Survey and damage assessment expertise.

c. Activities of companies operating in the financing sector:

1. Real estate financing and refinancing.
2. Real estate intermediation.
3. Real estate valuation.
4. Financial leasing.
5. Factoring activities.
6. Microfinance.

Article 3 A special register shall be established by the Financial Regulatory Authority for the registration, renewal of registration, and deletion of agents representing founders of companies operating in non-banking financial activities, to conclude document submission procedures for all establishment and licensing stages and other transactions before the Authority. Applications shall be submitted on a standardized form with sequential numbers according to the date of receipt. Each application shall have a dedicated file containing all related documents and data.

Article 4 Main tasks of founders' agents Without prejudice to powers explicitly stipulated in the agency contract, the founders' agent shall perform the following before the Authority:

• Submit the draft preliminary contract and articles of association on the Authority's standardized form, certified by one of the lawyers registered with the Bar Association.
• Submit all documents, data, certificates, and any other documents deemed necessary by the Authority.
• Deal with the Financial Regulatory Authority on all matters related to establishment and licensing procedures.

Article 5 Conditions for registration in the founders' agents register Registration in the aforementioned register requires meeting the following conditions: Formal Conditions:

• Submit a registration request on the standardized form, accompanied by the following documents and data:
• Copy of the National ID card.
• Copy of the academic degree certificate, certified by the Faculty of Law, Faculty of Commerce, Faculty of Economics and Political Science, or any other suitable qualification.
• Possession of Egyptian nationality and residence in the Arab Republic of Egypt.
• Possession of civil capacity.
• Good conduct and reputation.
• Original criminal record certificate.
• Certificate or declaration confirming no bankruptcy declaration judgments have been issued against them. Objective Conditions:
• Not be an employee of any government entity or public authority at the time of submitting the registration request.
• Not have previously worked for the Financial Regulatory Authority, unless at least three years have elapsed since leaving before submitting the registration request.
• Certified certificate of the applicant's registration in the Bar Association tables (Primary, Appeal, Cassation) or the Traders' Chamber in the accountants' table (Free professions branch for accounting and auditing... etc.), or a certificate from the relevant professional syndicate according to their qualification.
• Certified certificate from the registered syndicate confirming no disciplinary judgments have been issued against them. Founders' agents for companies operating in non-banking activities may be natural or legal persons. Professional Competence and Suitability Conditions:
• Possess experience in the field of company establishment.
• Statement of the supporting team members, their qualifications, experience, and criminal record certificates.

Article 6 Procedures for registration in the founders' agents register

• The competent department at the Authority shall study and examine registration, suspension, and deletion requests for founders' agents in the aforementioned register, and prepare a memorandum with the department's opinion for presentation to the committee formed at the Authority for this purpose to rule on the request.
• Registration requests shall be referred to the competent committee to review registration and renewal requests, and shall issue its decision by majority within fifteen days from the date of complete document submission. The Authority shall issue its ruling on the request within sixty days at most from the date of submitting complete documents. In case of rejection, the decision must be reasoned, and the applicant has the right to appeal the Authority's decision within ten days from the date of notification.

Article 7 Duration of registration

• The applicant shall be registered in the designated register for a period of three years by a decision issued by the Authority's Chairman. Renewal shall be for a similar period or periods, provided that the renewal request is submitted at least one month before the expiration of the registration period.

Article 8 Registration and renewal fees

• The applicant shall pay a fee of 10,000 EGP for the registration or renewal request in the designated register.
• Persons registered in the founders' agents register established for this purpose at the Authority are committed to submitting a periodic bi-annual report on the conduct of activities to the Authority.

Article 9 Prohibited acts The founders' agent, including team members, is prohibited from:

• Having any type of direct or indirect interest in the companies they are tasked with establishing.
• Registering incomplete or false data in the registration or renewal request.
• Performing any acts or transactions not required by the assigned task, aimed at increasing commissions, expenses, fees, or achieving profit or advantage for themselves or any of their employees.
• Publishing incorrect, incomplete, unverified data or information, or withholding material information or data.
• Acts or transactions that may lead to controlling a specific type of companies operating in non-banking financial activities.

Article 10 Cases for suspension of registration in the register The Authority's Chairman may, based on a recommendation from the committee formed for registration and renewal requests, issue a decision to suspend the registration of one of the registered persons for a period not exceeding six months, renewable for other periods, in the following circumstances:

• Filing a criminal lawsuit against them by the Authority regarding alleged incidents.
• Proven intentional errors in any data or documents at any stage of the request.

Article 11 Cases for deletion from the register The Authority's Chairman may issue a decision to delete the registration based on a recommendation from the committee formed for registration and renewal requests in the following circumstances:

• Failure to complete registration renewal procedures.
• If a registration condition is lost and not rectified within one month from the date of notification by the Authority.
• Issuance of a judicial or disciplinary judgment for a crime against honor or trust, or a felony.

Article 12 Legal liability Any clause or agreement exempting the founders' agent or the team from legal liability for acts, deeds, or behavior contrary to the provisions of laws, regulations, and decisions governing companies operating in non-banking financial activities shall be considered null and void.

Article 13 Regularization period Founders' agents for companies operating in non-banking activities shall submit to the Authority to take regularization procedures within a maximum period of six months from the date of implementation of this Decision.

Article 14 This Decision shall be published in the Egyptian Gazette and on the websites of the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette.