Decision No. (58) of 2022 on Conditions and Procedures for Establishing, Licensing, and Approving Companies and Entities Conducting Non-Banking Financial Activities via FinTech Technologies

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision No. (58) of 2022 dated 16/3/2022
Regarding the Conditions and Procedures Required for Establishment, Licensing, and Approval of Companies and Entities Wishing to Conduct Non-Banking Financial Activities through FinTech Technologies

The Board of Directors of the Financial Regulatory Authority

Having reviewed Law No. (54) of 1975 on Private Insurance Funds; And Law No. (10) of 1981 on Supervision and Control of Insurance in Egypt; And Law No. (95) of 1992 on the Capital Market; And Law No. (93) of 2000 on Central Deposit and Registration of Securities and Financial Instruments; And Law No. (148) of 2001 on Real Estate Financing; And Law No. (80) of 2002 on Combating Money Laundering; And Law No. (10) of 2009 on Regulating Supervision over Non-Banking Markets and Financial Instruments; And Law No. (141) of 2014 on Regulating the Activity of Financing Medium, Small, and Micro Enterprises; And Law No. (176) of 2018 on Regulating Financial Leasing and Factoring; And Law No. (18) of 2019 on Regulating the Use of Non-Cash Payment Means; And Law No. (18) of 2020 on Regulating Consumer Financing Activity; And Law No. (5) of 2022 on Regulating and Developing the Use of FinTech in Non-Banking Financial Activities; And Decision No. (53) of 2018 of the Board of Directors regarding licensing issuance and renewal conditions and share transfer rules for companies operating in non-banking financial activities;

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

And Decision No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities; And Decision No. (7) of 2021 regarding supervisory controls in combating money laundering and terrorist financing for entities operating in non-banking financial activities; And after approval by the Board of Directors in its session held from 16/3/2022 to 22/3/2022;

Decision

(Article One)
Scope of Application

The conditions and procedures outlined in this Decision apply to the establishment and licensing of companies wishing to conduct non-banking financial activities through FinTech technologies.
The conditions and procedures herein also apply to licensed companies and entities conducting any non-banking financial activities obtaining direct approval from the Authority to conduct these activities using certain FinTech domains, either directly or through one of the Authority-approved complex outsourcing entities.

(Article Two)
Establishment Requirements for Companies Wishing to Conduct Non-Banking Financial Activities Using FinTech

Establishment applications for companies wishing to conduct any non-banking financial activities using FinTech must be submitted through one of the registered promoters with the Authority who possess a digital identity, in accordance with the regulations issued by the Board of Directors, on the approved digital form for this purpose, via the dedicated electronic portal or any other means specified by the Authority. The application must include the following:

• 1. The company name and a statement of the promoters' names, including their digital identities in accordance with the Board of Directors' regulations.
• 2. A statement of the issued and paid-up capital as required by the laws governing non-banking financial activities.
• 3. A feasibility and economic study for the company, including a clarification of the digital business model and its applications through which the activity will be conducted.

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

• 4. Three copies of the preliminary contract and the company's articles of association.
• 5. A bank deposit certificate confirming the payment of the issued capital according to the nature of the activity the company will conduct.
• 6. A declaration from the company's auditor accepting the appointment.
• 7. A certificate issued by the General Authority for Investment and Free Zones confirming the non-duplication of the company's name.
• 8. A commitment to provide the necessary equipment, technological infrastructure, information systems, and protection and security means to conduct the activity in accordance with requirements issued by a Board of Directors' decision upon obtaining the license.
• 9. A commitment to submit a certificate from one of the licensed central deposit and registration companies to deposit the company's securities upon obtaining the license to conduct the activity.

The Authority shall maintain a register of establishment applications for the aforementioned companies with tracking numbers according to the date of receipt of each. Each application shall have a dedicated file containing establishment documents and all related procedures. By decision of the Chairman of the Authority, a committee comprising technical and legal elements shall be formed to provide an opinion and present it to the Chairman for a decision on the establishment of such companies within thirty days. Failure to issue a decision within this period shall be deemed a rejection of the establishment application.

(Article Three)
Conditions for Obtaining a License to Conduct Non-Banking Financial Activities Using FinTech

Companies wishing to obtain a license to conduct any non-banking financial activities using FinTech must meet the following conditions:

• 1. The company must adopt the required legal form as stipulated by the laws governing each activity, with its issued and paid-up capital not less than the amount required for each activity.
• 2. The company's work must be limited to conducting the licensed activities.
• 3. Legal entities must constitute at least (50%) of the company's capital among its promoters, and financial institutions must not constitute less than (25%) of its capital, in accordance with the provisions of Decision No. (53) of 2018 mentioned above and its amendments.
• 4. Execution of an insurance policy against cyber risks issued by one of the insurance companies licensed by the Authority, in accordance with the regulations issued by the Authority on this matter.

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

• 5. The company must possess the necessary equipment, technological infrastructure, information systems, and protection and security means to conduct the activity in accordance with requirements issued by a Board of Directors' decision upon obtaining the license.
• 6. The company's organizational structure must include the following key functions: (Cybersecurity Officer – Operations Officer – Internal Auditor for Information Systems and Artificial Intelligence – Technology Risk Management Officer), provided they meet the conditions and standards specified by the Authority.
• 7. The Managing Director of the company must hold a suitable higher qualification, and the required experience conditions must be met for each activity as stipulated.
• 8. The Managing Director and key function managers, including technological functions, must pass the tests/personal interviews specified by the Authority.

(Article Four)
Procedures for Obtaining a License to Conduct Non-Banking Financial Activities Using FinTech

The license application must be submitted through one of the registered promoters with the Authority who possess a digital identity, in accordance with the Board of Directors' regulations, on the approved digital form, via the dedicated electronic portal or any other means specified by the Authority, accompanied by documents proving compliance with the conditions in Article Three of this Decision, in addition to the following documents:

• 1. The preliminary contract, articles of association, commercial register, and tax card of the company.
• 2. A statement of contributions representing at least (10%) in any financial institutions operating in Egypt and owned by the promoters or board members whose ownership exceeds (10%) of the company's shares.
• 3. A manual containing technical documentation of the equipment, technological infrastructure, information systems, and protection and security means used in conducting the activity.
• 4. A copy of the company headquarters' occupancy certificate.
• 5. Minutes of the founding assembly/board of directors confirming the formation of management in accordance with corporate governance documents and requirements for companies operating in non-banking financial activities, along with their names and designation of each.
• 6. Proof of payment of the licensing fee of fifty thousand Egyptian pounds, payable via one of the non-cash payment means.

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

(Article Five)
Conditions for Licensed Companies and Entities to Conduct Non-Banking Financial Activities

Licensed companies and entities conducting any non-banking financial activities using certain FinTech domains must obtain Authority approval if they wish to:

• 1. The company or entity must not be in violation of the provisions of the law governing the activity issued by law or decisions implementing it at the time of submitting the approval request.
• 2. Possession of the necessary equipment, technological infrastructure, information systems, and protection and security means to conduct the activity in accordance with requirements issued by a Board of Directors' decision.
• 3. Execution of an insurance policy against cyber risks issued by one of the insurance companies licensed by the Authority, in accordance with the Authority's regulations on this matter.
• 4. The organizational structure of the company or entity must include the following key functions: (Cybersecurity Officer – Operations Officer – Internal Auditor for Information Systems and Artificial Intelligence – Technology Risk Management Officer), provided they meet the conditions and standards specified by the Authority.
• 5. Key technological function officials must pass the tests/personal interviews specified by the Authority.

(Article Six)
Procedures for Licensed Companies or Entities to Obtain Authority Approval

The application for licensed companies or entities conducting any non-banking financial activities using certain FinTech domains to obtain direct Authority approval must be submitted upon compliance with the conditions in Article Five of this Decision, in addition to documents proving:

• 1. The digital business model and its applications through which the activity will be conducted.

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

• 2. A manual containing technical documentation of the equipment, technological infrastructure, information systems, and protection and security means used in conducting the activity.
• 3. Proof of payment of the approval fee of twenty-five thousand Egyptian pounds, payable via one of the non-cash payment means.

(Article Seven)
Procedures for Licensed Companies or Entities to Obtain Direct Authority Approval Using FinTech Domains

The application for licensed companies or entities conducting any non-banking financial activities using certain FinTech domains to obtain direct Authority approval must be submitted upon compliance with the conditions in Article Five of this Decision, in addition to documents proving:

• 1. The digital business model and its applications through which the activity will be conducted.
• 2. A manual containing technical documentation of the equipment, technological infrastructure, information systems, and protection and security means used in conducting the activity.
• 3. Proof of payment of the approval fee of twenty-five thousand Egyptian pounds, payable via one of the non-cash payment means.

(Article Eight)
Examination, Study, and Adjudication of License and Approval Applications

By decision of the Chairman of the Authority, a committee comprising legal and technical elements according to each activity shall be formed to study and provide an opinion on applications submitted to the Authority for obtaining a license or approval, as applicable, to conduct non-banking financial activities in accordance with this Decision, and to adjudicate these applications within thirty days from the date of complete documentation. In case of rejection, it must be reasoned. Consideration shall be given when studying and adjudicating an approval application to whether administrative measures or supervisory procedures were issued against the company or entity during the preceding sixty days prior to submitting the approval request.

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

(Article Nine)
The provisions of Decision No. (53) of 2018 of the Board of Directors regarding licensing issuance and renewal conditions and share transfer rules for companies operating in non-banking financial activities shall apply to companies wishing to obtain a license from the Authority to conduct any non-banking financial activities in accordance with this Decision, insofar as no specific provision exists herein, provided that the transferee possesses a digital identity in accordance with the Board of Directors' regulations. The provisions of any other Board of Directors' decisions regarding licensing to conduct the aforementioned activities shall also apply. Companies obtaining a license from the Authority to conduct any non-banking financial activities in accordance with this Decision must comply with Board of Directors' decisions regarding corporate governance rules for companies operating in non-banking financial activities and anti-money laundering and terrorist financing controls. Companies and entities obtaining a license or approval from the Authority to conduct any non-banking financial activities in accordance with this Decision must maintain the necessary records or ledgers to conduct their activity in accordance with the regulations specified by the Authority.

(Article Ten)
Existing companies and entities conducting any non-banking financial activities using FinTech must document their status in accordance with the provisions of this Decision within six months from the date of its implementation.

(Article Eleven)
This Decision shall be published in the Egyptian Gazette and on the Authority's and Egyptian Exchange's websites, and shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors
Dr. Mohamed Omran

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Tel: +202 35345350
Fax: +202 35370036
WWW.FRA.GOV.EG

Building Bridges not Walls
Build Bridges, Not Walls