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Decision of the Board of Directors of the Authority No. (159) of 2014

Dated 3/12/2014

Regarding the Basic Statute of the Supervision Unit for Microfinance Activities of Associations and Civil Society Institutions

Board of Directors of the General Authority for Financial Supervision

Having reviewed the Constitution;
Having reviewed the Presidential Decision by Law No. (141) of 2014 on regulating microfinance issued as a law; Having reviewed Law No. (10) of 2009 on regulating supervision over markets and non-banking financial instruments; Having reviewed the Board of Directors Decision of the Authority No. 158 of 2014 regarding microfinance activities and values; Having reviewed the approval of the Board of Directors of the Authority in its meeting No. (71) held on 3/12/2014.

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Decided

Article (1)
The provisions of the Basic Statute of the Supervision Unit for Microfinance Activities of Associations and Civil Society Institutions attached to this Decision shall be applied.

Article (2)
The provisions of the laws, regulations, and decisions applicable to the Authority and its employees shall apply to the Unit and its employees, insofar as no specific provision is stipulated in this Statute or in the financial and administrative regulations and employee affairs of the Unit.

Article (3)
The provisions of this Decision shall be applied from the day following its issuance date.

Chairman of the Board of Directors
Sherif Samy

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Basic Statute of the Supervision Unit for Microfinance Activities of Associations and Civil Society Institutions

Chapter One: Unit Definition and Competencies

Article (1) Unit:
The Supervision Unit for Microfinance Activities of Associations and Civil Society Institutions is an independent unit with a special character, established within the General Authority for Financial Supervision in accordance with Article (13) of Law 141 of 2014 on supervising microfinance activities by Associations and Civil Society Institutions. Its main headquarters shall be located at one of the Authority's premises, and it may have branches in other governorates by a decision of the Board of Directors of the General Authority for Financial Supervision.

Article (2) Scope of Work and Competencies of the Unit: The Unit is competent to regulate, supervise, and monitor the microfinance activities of Associations and Civil Society Institutions by undertaking the following:

(1) Establishing the conditions for obtaining a license to practice microfinance activities for Associations and Civil Society Institutions.

(2) Establishing the necessary rules and standards for Associations and Civil Society Institutions to practice their declared activity and manage associated risks, and submitting them to the Board of Directors of the Authority for issuance.

(3) Establishing inspection and supervision rules for Associations and Civil Society Institutions in the field of practicing microfinance activities, and submitting them to the Board of Directors of the Authority for issuance.

(4) Establishing mechanisms to protect counterparties dealing with Associations and Civil Society Institutions operating in the microfinance field.

(5) Working to harmonize rules and regulations governing the practice of the activity between companies and Associations and Civil Society Institutions practicing the activity, where permitted.

(6) Establishing controls on the participation of Associations and Civil Society Institutions in companies operating in the microfinance field.

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(7) Monitoring the compliance of Associations and Civil Society Institutions operating in the microfinance field with Law No. (141) of 2014 and the decisions issued in implementation thereof.

(8) Establishing controls on the governance or a portion of the entire credit portfolio from or to any of the Associations and Civil Society Institutions operating in the microfinance field.

(9) Approving the governance or a portion of the entire credit portfolio from or to any of the Associations and Civil Society Institutions operating in the microfinance field.

(10) Preparing a database ensuring all data and information regarding microfinance activities and the performance of Associations and Civil Society Institutions operating in the microfinance field.

(11) Preparing studies related to microfinance activities and their development, and issuing related reports and statistics.

(12) Monitoring the performance and practices of Associations and Civil Society Institutions practicing microfinance activities, and taking necessary measures to verify their compliance with the provisions of the law and the rules, regulations, and standards established by the Unit.

(13) Championing awareness initiatives regarding microfinance activities and issuing related brochures and media spots across various print, broadcast, and electronic media.

(14) Championing and supporting training and skills development programs for employees in the microfinance field within Associations and Civil Society Institutions practicing such activities, as well as other relevant entities, either directly or through the Financial Services Institute, the Egyptian Microfinance Union, or other relevant bodies.

(15) Monitoring the practical implementation results of Law 141 of 2014 and other legislation regulating microfinance activities concerning Associations and Civil Society Institutions, and proposing necessary amendments.

(16) Coordinating with relevant departments of the General Authority for Financial Supervision.

(17) Coordinating with the Egyptian Microfinance Union and various relevant local, regional, and international entities to contribute to the development of microfinance activities and the management of associated risks.

(18) Submitting monitoring reports to the Chairman of the Authority, including necessary recommendations regarding Associations and Civil Society Institutions violating the provisions of this law or failing to comply with the rules and standards for practicing the activity.

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(19) Performing the administrative, financial, and employee-related tasks necessary to carry out the activity within the framework of the regulations governing them, and the Chairman of the Authority may delegate this to other departments within the same specialization at the General Authority for Financial Supervision.

Chapter Two: Unit Management

Article (3): Unit Organization
The Unit shall have a Board of Trustees, and its administrative structure shall include a number of organizational units headed by an Executive Director who shall carry out the Unit's work and supervise its employees. The Unit's organizational structure shall be issued by a decision of the Board of Directors of the General Authority for Financial Supervision, without being bound by the systems and rules applicable in the government, public sector, and public business sector.

Article (4): Board of Trustees
The Board of Trustees of the Unit shall be formed as follows:

(1) A representative of the Central Bank of Egypt, nominated by the Governor.

(2) A representative of the competent ministry applying the Associations and Civil Society Institutions Law, nominated by the competent Minister.

(3) A representative of the Social Fund for Development, nominated by its Secretary General.

(4) Three representatives of the General Authority for Financial Supervision, nominated by the Chairman of the Authority.

(5) Two leaders from Associations and Civil Society Institutions operating in the field.

(6) One member with expertise, nominated by the Chairman of the Authority.

A decision by the Board of Directors of the General Authority for Financial Supervision shall be issued to form the Board and determine the financial duties of its members, ensuring that the decision specifies the Chairman and Vice Chairman of the Board of Trustees from among the members referred to in item (4). The term of the Board of Trustees shall be two years, renewable. The Board of Directors of the Authority may replace any of the members referred to in items (5) and (6) if a member misses three consecutive meetings or six separate sessions within one year without acceptable excuse.

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Article (5): Competencies of the Board of Trustees

A. Studying ways to develop the microfinance activities practiced by entities under the Unit's supervision and oversight, and organizing the economic and social returns therefrom.

B. Monitoring the Unit's performance of its assigned tasks.

C. Approving the conditions for obtaining a license to practice microfinance activities for entities under the Unit's supervision and oversight.

D. Approving the rules and standards necessary for practicing microfinance activities and managing associated risks for entities under the Unit's supervision and oversight, and referring them to the Board of Directors of the General Authority for Financial Supervision for consideration of issuance.

E. Approving controls on the participation of entities under the Unit's supervision and oversight in companies operating in the microfinance field.

F. Approving controls on the governance or a portion of the entire credit portfolio from or to any of the entities under the Unit's supervision and oversight.

G. Approving inspection and supervision rules for entities under the Unit's supervision and oversight in the field of practicing microfinance activities, and referring them to the Board of Directors of the General Authority for Financial Supervision for consideration of issuance.

H. Reviewing reports on the monitoring of performance and practices of entities under the Unit's supervision and oversight, and following up on necessary measures taken to verify their compliance with the provisions of the law and the rules, regulations, and standards established by the Unit.

I. Referring periodic monitoring reports and any recommendations deemed necessary regarding violations by entities under the Unit's supervision and oversight, or regarding legislation, rules, and regulations governing microfinance activities not under the Unit's supervision and oversight, to the Chairman of the General Authority for Financial Supervision.

J. Reviewing any matters referred to the Board of Trustees by the Chairman of the General Authority for Financial Supervision, the Board of Directors of the Egyptian Microfinance Union, the Governor of the Central Bank of Egypt, or the Minister of Social Solidarity.

K. Taking what is deemed necessary to achieve the objectives of the Unit stipulated in the law.

The Board of Trustees of the Unit may form one or more committees from among its members and other experts in its field of work to perform specific tasks, with these tasks and the required timeframe specified.

Article (6): Chairman of the Board of Trustees The Chairman of the Board of Trustees of the Unit is the General Supervisor of the Unit, ensuring its objectives are met in light of the law and the regulations governing it. His competencies are defined as follows:

(1) Convening the Unit's Board of Directors meeting and determining the agenda.

(2) Managing Board of Trustees meetings to achieve the desired outcomes.

(3) Monitoring the implementation of decisions of the Authority's Board of Directors related to the Unit, as well as decisions and recommendations of the Unit's Board of Trustees.

(4) Appointing experts and employees of the Unit.

The Vice Chairman of the Board of Trustees of the Unit shall replace the Chairman in his absence.

Article (7): Members of the Board of Trustees of the Unit All members of the Board of Trustees of the Unit shall ensure the following:

A. Being informed of the Unit's status and operations, and studying the working papers and memoranda presented to them for discussion in Board of Trustees meetings.

B. Attending all Board of Trustees meetings, and submitting an excuse in case of inability to attend.

C. Committing to maintaining the confidentiality of the Board of Trustees' deliberations and topics presented to it.

D. Informing the Board of the existence of any conflict of interest concerning any of them regarding matters discussed by the Board or related to the Unit's operations.

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Article (8): Meetings of the Board of Trustees of the Unit The Board of Trustees of the Unit shall convene as work dictates, and no less than once every six weeks at least, upon invitation from the Chairman of the Board. A meeting shall not be validly constituted unless more than half of the members are present, including at least one representative of the General Authority for Financial Supervision.

The meeting invitation must include the agenda and attached memoranda and reports required for discussion, or provide members with them at least three days prior to the scheduled meeting date.

The Board's decisions shall be issued by a majority of members' opinions, and in case of a tie, the Chairman's vote shall prevail.

The Board may invite to its sessions anyone it deems necessary to achieve the Unit's objectives. Invitees shall have the right to participate in discussions and provide advice, but shall not have voting rights.

The Board may convene upon the request of one-third of the members to discuss urgent matters. In exceptional cases that do not tolerate delay, the Board may issue decisions by circulation, provided they are approved unanimously and these decisions are presented at the next following Board of Trustees meeting for information.

Article (9): Minutes and Decisions of the Board of Trustees All minutes of the Board of Trustees meetings shall be documented, as well as its decisions, which shall be numbered sequentially.
At the beginning of each Board of Trustees meeting, the minutes of the previous meeting shall be presented for approval.

Article (10): Secretary of the Board of Trustees of the Unit The Chairman of the Board of Trustees of the Unit shall designate who shall perform the duties of the Board Secretary, who shall undertake the following:

A. Preparing invitations for Board of Trustees meetings and their attachments, as well as committees formed by the Board, and sending them.

B. Recording minutes of Board of Trustees meetings or committees formed by the Board, and following up on their approval.

C. Notifying concerned parties of the Board of Trustees' decisions.

D. Safeguarding files related to all minutes of Board of Trustees meetings and documents discussed by the Board in its meetings.

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Article (11): Executive Director of the Unit The Executive Director supervises the performance of the Unit's work and its employees, represents it within its authorities vis-à-vis third parties, and strictly follows the decisions of the Board of Directors of the General Authority for Financial Supervision, the Chairman of the Authority, and the Board of Trustees of the Unit regarding its activities. He shall attend Board of Trustees meetings without a casting vote.

The Chairman of the General Authority for Financial Supervision shall appoint the Executive Director of the Unit from among the Authority's employees or from outside from those possessing the necessary expertise in the field – after obtaining the opinion of the Board of Trustees of the Unit – and shall determine his financial compensation. The Chairman of the General Authority for Financial Supervision may replace the Executive Director at any time based on performance and after obtaining the opinion of the Board of Trustees of the Unit.

Chapter Three: Administrative and Financial System of the Unit

Article (12): Financial, Administrative, and Employee Regulations The financial, administrative, and employee regulations for the Unit shall be issued by a decision of the Board of Directors of the General Authority for Financial Supervision, without being bound by the systems and rules applicable in the government, public sector, and public business sector.

Article (13): The Unit's revenues shall consist of the following:

(a) Fees for services provided by Associations and Civil Society Institutions.

(b) Appropriations allocated in the budget of the General Authority for Financial Supervision.

(c) Fines imposed on Associations and Civil Society Institutions for violations of the law or in lieu of settlement.

(d) Donations, gifts, grants, and subsidies provided to the Unit and approved by the Board of Directors of the Authority.

(e) Other revenues resulting from services provided by the Unit to third parties.

The Unit shall have a separate account at the Central Bank of Egypt within the Authority's accounts. The Chairman of the Board of Trustees of the Unit shall determine the authorized signatory for spending from this account.