Chairman of the Board of Directors

EFSA Board Decision No. (40) of 2015

Dated 19/4/2015

Regarding the Conditions for Registering, Transferring, and Closing Branches of Companies Licensed to Conduct Securities Portfolio Formation and Management Activities

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Board of Directors of the Egyptian Financial Supervisory Authority

After reviewing the Capital Market Law issued by Law No. (95) of 1992 and the decisions issued to implement it; and the Central Depository and Registration of Securities Law issued by Law No. (93) of 2000 and its executive regulations; and Law No. (10) of 2009 regarding the regulation of supervision over non-banking financial markets and instruments; and Presidential Decision No. (192) of 2009 issuing the Basic Statute of the Egyptian Financial Supervisory Authority; and EFSA Board Decision No. (67) of 2008 regarding the approval of the service fee report for studying and examining branch establishment applications for portfolio management companies; and EFSA Board Decision No. (80) of 2011 dated 28/9/2011 regarding the provisions governing the registration of execution and marketing branches of securities companies in the Authority's register; and EFSA Board Decision No. (1) of 2015 regarding the conditions for transferring and closing branches of companies licensed to conduct securities underwriting activities; and the memorandum of the Central Department of Establishment and Licensing; and the approval of the Authority's Board of Directors in its meeting held on 19/4/2015;

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Decided:

(Article One)

Companies licensed to conduct securities portfolio formation and management activities shall not conduct business or market and promote the company's services through offices or other locations other than the company's headquarters, except after obtaining prior approval from the Authority and registering the branch in the dedicated register maintained by the Authority, based on an application submitted by the company accompanied by evidence of its compliance with the conditions stipulated in this Decision.

A special register shall be established by the Authority for branch registration, with each branch assigned a serial number linked to the securities portfolio formation and management company's license number.

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(Article Two)

Approved branches registered in the dedicated register shall be classified as follows:

First: Branches for conducting securities portfolio formation and management activities:

This branch shall possess all the authorities of the headquarters, subject to the supervision of the company's Managing Member.

Second: Marketing and promotion branches:

The activity of this branch shall be limited to marketing and promoting the company's services, introducing the company's policies, the legislation governing capital markets in general, and the company's activities within the governorate where the branch is located, in order to attract new clients, within the scope of the company's licensed purpose. It shall perform the following tasks:

• Executing clients' requests to open accounts and collecting the necessary data and documents, and facilitating account opening processes with the company.
• Providing periodic reports to branch clients regarding their securities portfolio balances and account statements issued by the headquarters.

Any employee working in these branches is prohibited from forming or managing clients' securities portfolios.

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(Article Three)

Companies wishing to register a new branch shall submit an application to the Authority accompanied by the following documents:

1. A certified copy of the commercial register confirming that the company's issued and paid-up capital is not less than five hundred million Egyptian pounds.

2. A board of directors resolution establishing the branch, defining its mission, address, branch manager, and specifying the minimum number of required positions for the branch.

3. A true copy of the lease agreement or property deed for the branch's premises, stamped with the company seal and signed by the Chairman of the Board or the Managing Member.

4. A company certificate stating the estimated number of employees and that the branch is equipped with physical and electronic devices and equipment suitable for the branch's nature (with a list of these facilities), stamped with the company seal and signed by the Chairman of the Board or the Managing Member.

5. A declaration from the Chairman of the Board or the Managing Member committing to make any modifications to the branch's facilities in accordance with the standards and specifications issued by the Authority regarding branches.

6. Payment of the study and examination service fee for branch establishment applications in the amount of five thousand Egyptian pounds.

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(Article Four)

6. Submission of a company-stamped certificate confirming the appointment of a branch manager who meets the general conditions stipulated in Article Six of the Authority Chairman's Decision No. 24 of 2007 and fulfills the conditions stipulated in item (b) of the following paragraph according to the branch type.

The following conditions are required to approve the company's application to open a new branch:

First: The company's record must be free of any penalties or administrative measures during the period preceding the branch registration application, unless the following periods have elapsed:

(a) One year from the date of expiration of the suspension period in accordance with Article (30) or from the date of expiration of the prohibition period on conducting business in accordance with Law No. (31) of the Capital Market Law.

(b) Six months from the date the company recovered the additional insurance amount.

(c) Three months from the date any of the other measures stipulated in Article (31) of the Capital Market Law takes effect, except for the measures stipulated in item (a) of Article (31) if the company provides evidence that it has rectified the reasons for them.

Second: The marketing and promotion branch manager must have at least four years of experience in the securities or securities exchange field and pass examinations approved by the Authority. For branches conducting securities portfolio formation and management activities, the branch must have a dedicated executive manager with at least five years of experience in managing securities portfolios or investment fund portfolios, and pass examinations approved by the Authority.

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(Article Five)

A company may change the activity of a marketing and promotion branch to a securities portfolio formation and management branch, or vice versa, provided that all branch-related conditions stipulated in this Decision are met and prior approval is obtained from the Authority.

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(Article Six)

Companies wishing to close one or more of their branches shall submit an application to the Authority accompanied by the following documents:

1. A board of directors minutes including approval for the final closure of the branch.

2. A declaration issued by the company's Managing Member confirming that all clients have been notified of the headquarters or branch address to which their balances and accounts will be transferred, at least one week prior to the actual closure execution.

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(Article Seven)

The Authority's Establishment and Licensing Department shall examine applications for registering, transferring, changing the activity of, or closing a branch within a maximum of ten days from the date of document completion as required by this Decision. If the company's application is rejected, the aforementioned department must notify the company of the reasons for rejection.

A decision by the Authority Chairman shall be issued approving the registration, transfer, activity change, or closure of the branch. The company shall be granted a certificate from the Authority containing the approval details, including the approval date, type, and branch registration number in the Authority's register.

The Authority's approval for the final closure of a branch entails the revocation of the branch opening approval, with this noted in the competent commercial register.

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(Article Eight)

In cases where a company is licensed to conduct more than one activity subject to the provisions of Law No. 95 of 1992, branch officials shall not conduct any work related to those activities that would exceed the branch's purpose limits according to the licenses issued by the Authority in this regard.

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(Article Nine)

The company shall notify the Authority of any new appointments or resignations at the branch by managers or any technical staff, and the methods thereof, within a maximum of fifteen days from the date of appointment or resignation, as applicable, using the forms specified by the Authority for this purpose.

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(Article Ten)

The company shall pay an annual service fee to the Authority for the supervision and monitoring of those branches in the amount of seven thousand Egyptian pounds, payable during January of each year, in accordance with EFSA Board Decision No. (67) of 2008.

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(Article Eleven)

Existing companies operating in securities portfolio formation and management activities shall regularize the status of their branches in accordance with the provisions of this Decision within a period not exceeding six months from the date of its implementation.

The Establishment and Licensing Department shall register the regularized status of current and new branches in the Authority's branch register.

This shall be done according to their registration date in the register, with a unique registration number assigned to each branch within the register.

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(Article Twelve)

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. Competent authorities are tasked with its implementation, and any provision conflicting with its provisions is hereby repealed.

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Chairman of the Board of Directors
Sherif Samy

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Egyptian Financial Supervisory Authority
Egyptian Financial Supervisory Authority

Office of the Authority Chairman

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Authority Headquarters: Sh. Emad El-Din – Cairo – Egypt P.O. Box: 618 – Postal Code: 11111 Email: info@efsa.gov.eg Website: www.efsa.gov.eg Telephone: (+202) 37727122 Fax: (+202) 35741000