Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

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Chairman of the Authority

Decision of the Board of Directors of the Authority No. (99) of 2020 dated 23/6/2020

Amending Decision of the Board of Directors of the Authority No. (176) of 2018 Regarding the Establishment and Licensing Requirements for Rating Agencies

The Board of Directors of the Financial Regulatory Authority

Having reviewed the Capital Market Law issued by Law No. (95) of 1997 and its Executive Regulations; And Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; And Decision of the Board of Directors of the Authority No. (176) of 2018 regarding the establishment and licensing requirements for rating agencies; And after approval by the Authority's Board of Directors in its meeting held on 23/6/2020;

Has Decided

(Article One)

Three new paragraphs shall be added to Article Seven of Decision of the Board of Directors of the Authority No. (176) of 2018 regarding the establishment and licensing requirements for rating agencies, with the following text:

(Article Seven - Paragraph Two):

In the event that the independence condition with the beneficiary entity is not met as stipulated in item (2) of the preceding paragraph, the rating agency must have the paying agent or any other independent party, independent of both the beneficiary entity and the rating agency and approved by the Authority, perform the following tasks:

• 1- Monitor the issuer's distribution of sukuk returns and the repayment of the sukuk's principal value on the dates specified for this purpose in the offering prospectus.

• 2- Monitor the rating agency's obligations set forth in the information memorandum in accordance with the provisions of the Capital Market Law and its Executive Regulations.

• 3- Convene a meeting of the sukuk holders whenever necessary, or upon a written request from sukuk holders whose nominal sukuk ownership does not fall below (10%) of the total nominal value of the issuance.

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(Article Seven - Paragraph Three):

Both the rating agency and the paying agent or independent party shall be committed to the following:

• 1- Issuing a periodic report to the Authority and the sukuk holders, disclosing the quality of the securitized assets.

• 2- Renewing the credit rating of the asset or asset portfolio from one of the credit rating agencies registered with the Authority.

• 3- Immediately disclosing any material event that could affect the asset's cash flows or the returns due to sukuk holders.

• 4- Immediately disclosing any conflict of interest situations.

(Article Seven - Paragraph Four):

In all cases, whenever a paying agent or independent party is appointed as mentioned in the preceding two paragraphs, the sukuk issuance must be private, and sukuk holders must be disclosed the nature of the relationship between the beneficiary entity and the rating agency.

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(Article Two)

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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Chairman of the Board of Directors of the Authority Dr. Mohamed Omran

Smart Village, Building 137, Giza, Egypt
Postal Code: 110
Telephone: +2027052050
Fax: +2023070067
WWW.FRA.GOV.EG

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