Decision of the Capital Market Authority Board of Directors

No. (195) of 2018 dated 31/12/2018

Regarding the Rules and Procedures Governing Suspension of Activity, Liquidation, Merger, or Acquisition of Licensed Financial Leasing and Factoring Companies

Capital Market Authority Board of Directors

Having reviewed the Joint Stock Companies, Partnerships Limited by Shares, Limited Liability Companies, and Single-Person Companies Law issued by Law No. (159) of 1981 and its Executive Regulations;

and the Capital Market Law issued by Law No. (95) of 1992 and its Executive Regulations;

and Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments;

and the Law regulating financial leasing and factoring activities issued by Law No. (176) of 2018;

and Presidential Decree No. (192) of 2009 issuing the Basic Statute of the Capital Market Authority;

and Capital Market Authority Board Decision No. (53) of 2018 regarding licensing conditions, continuity, and share ownership rules for companies operating in non-banking financial activities;

and Capital Market Authority Board Decision No. (137) of 2018 regarding licensing conditions and continuity for financial leasing and factoring companies;

and upon the approval of the Authority's Board of Directors in its session held on 31/12/2018;

Decided

Article One

The rules and procedures set forth in this Decision shall apply to companies licensed to conduct financial leasing or factoring activities when they wish to suspend their activity, liquidate, merge, or acquire company shares.

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Article Two

Suspension of Activity

Licensed financial leasing or factoring companies wishing to suspend their activity must apply to the Authority to obtain its approval.

The application shall be submitted by the company's legal representative, accompanied by the following:

1. Reasons and justifications for suspending the activity.
2. Minutes of the Extraordinary General Assembly containing the decision to approve the suspension, with the suspension period specified as not less than six months and not exceeding one year, renewable for one or more periods, with a maximum limit of three years.
3. Provided that if the maximum suspension period expires without the company resuming its activity, the company shall be obligated to refer the matter to the Extraordinary General Assembly to consider continuing the activity or proceeding with liquidation procedures.
4. A certificate clearing the company of any obligations to the Authority or third parties, accompanied by supporting documents.
5. A certificate from the company's legal advisor regarding the legal status of the company concerning disputes and litigation.

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Article Three

Liquidation of Company Activity

Licensed financial leasing or factoring companies wishing to liquidate their activity must apply to the Authority to obtain its approval.

The liquidation application shall be submitted by the company's legal representative, accompanied by the following:

1. Reasons and justifications for liquidation.
2. Decision of the Extraordinary General Assembly approving the company's liquidation, accompanied by a consolidated accounts report.
3. Proposed measures and procedures to reduce the company's obligations and transfer associated contractual rights and obligations to other licensed entities, ensuring no prejudice to the rights of parties dealing with the company.

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Article Four

Merger

Licensed financial leasing or factoring companies wishing to merge into other companies must submit an application to the Authority to obtain its approval.

The merger application shall be submitted by the legal representative of the merging company, accompanied by the following:

1. Statement of reasons for the merger and its terms.
2. Decisions issued by the Board of Directors and the Extraordinary General Assembly of both the merging company and the merged company regarding approval of the merger.
3. Report from the external auditor of both the merging and merged companies regarding the merger process.
4. Method for determining the rights and obligations of shareholders of the merging and merged companies.
5. Proposed measures and procedures for transferring financing agreements to the merged company.

In all cases, the merged company must hold a license to conduct the activity in accordance with the provisions of the aforementioned Law regulating financial leasing and factoring activities.

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Article Five

Acquisition of Company Shares

Without prejudice to the provisions of Chapter Two of the Executive Regulations of the Capital Market Law regarding takeover offers, "acquisition" with respect to companies whose securities are listed on the Egyptian Exchange or whose securities were offered in a public offering in the primary market or through a public offering in the trading market, even if their shares are not listed, shall be governed regarding the acquisition of shares of financial leasing or factoring companies by the provisions stipulated in Capital Market Authority Board Decision No. (53) of 2018 regarding licensing conditions, continuity, and share ownership rules for companies operating in non-banking financial activities.

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Article Six

Application Review

The Authority shall review applications submitted regarding suspension of activity, liquidation, merger, or acquisition of company shares, and shall consider in its decision the extent to which such actions affect free competition, activity stability, customer rights protection, market stability considerations, and shareholders' interests.

The applicant shall be notified of the approval or rejection of the application via a reasoned decision within a period not exceeding sixty days from the date of submission if complete, or from the date of completion of documents and data requested by the Authority.

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Article Seven

In the absence of specific provisions in this Decision regarding liquidation and merger rules, the provisions of the Joint Stock Companies, Partnerships Limited by Shares, Limited Liability Companies, and Single-Person Companies Law issued by Law No. (159) of 1981 shall apply.

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Article Eight

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.

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Board of Directors of the Authority

Dr. Mohamed Omran

Smart Village, Building No. B-136, Giza, Egypt Postal Code: 12577 Tel.: +202 35345350 - Fax.: +202 35370036 info@fra.gov.eg

www.FRA.gov.eg