Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision No. (77) of 2019

Concerning Financial Leasing and Factoring Contract Templates

Chairman of the Financial Regulatory Authority

Having reviewed Law No. (10) of 2009 concerning the regulation of supervision over markets and non-banking financial instruments;

and Law No. (176) of 2018 concerning Financial Leasing and Factoring;

and Presidential Decree No. (192) of 2009 issuing the Statute of the Financial Regulatory Authority;

and the Authority's Board of Directors Decision No. (139) of 2018 concerning the provisions and procedures for registration in the Financial Leasing Contracts Register;

and the Authority's Board of Directors Decision No. (163) of 2018 concerning the executive controls for practicing the factoring activity;

and the Memorandum of the Central Administration for Supervision and Oversight of Financing Companies dated 12/2/2019;

Decided

(Article One)

Financial leasing and factoring contracts shall be drafted in accordance with the attached templates, and companies are committed to the minimum data fields contained in these contract templates when practicing their activity.

(Article Two)

This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the date of its issuance.

Chairman of the Board of Directors Financial Regulatory Authority Dr. Mohamed Osman

Smart Village, Building No. B-136, Giza, Egypt Postal Code: 12577 Tel.: +202 35345350 - Fax: +202 35370036 info@fra.gov.eg Smart Village, Building no. B-136, Giza Postal Code: 12577 Tel.: (00202) 35345350 - Fax.: (00202) 35370036 www.FRA.gov.eg

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Financial Leasing Contract Template

This Contract is executed on / / corresponding to

Contract Details

Parties:

(1) Financial Leasing Company Details (First Party - Lessor)

• Company Name: .............................................
• Registration Number in the Financial Lessors Register at the Financial Regulatory Authority: (..............)
• Commercial Registration Number: .........................................
• Company Address: ...............................................

Authorized Signatories:

• Mr./............................................. in his capacity as/...........................................

(2) Lessee Details (Second Party - Lessee)

• Lessee Name: .............................................
• Activity: .............................................
• Legal Form: .............................................
• Commercial Registration No.: .............................................
• Tax Card No.: .............................................
• Address: ...............................................

Authorized Signatories:

• Mr./............................................. in his capacity as/...........................................

Description of Leased Assets

The Lessor has agreed to lease the assets that he owns, or has purchased, or has the right to lease, as detailed below:

• Name of Supplier / Seller / Contractor: .............................................
• Lessor's Title Deed: .............................................
• Price mentioned in the Title Deed: .............................................

First Party Lessor Second Party Lessee 46076 Financial Regulatory Authority Chairman's Office

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Type of Leased Asset: Tangible / Intangible / Usufruct Right Name of the Beneficial Owner in case the leased asset is a usufruct right: ............................................. Description of the Leased Asset: ............................................. Designated Purpose for Use of the Leased Asset: .............................................

Rental Value

The Parties have agreed that the rental value shall be as follows:

• Down Payment: ........................ EGP (Only) (Fixed)
• Rental Value: ........................ EGP (Only) (Fixed)
• Total Rental Value: ........................ EGP (Only) (Fixed)

Payment of rent in (monthly/quarterly/semi-annually/annually) and rent payment shall commence from date / / ... and end on / / ... The Parties also agreed that the value of returns, commissions, and expenses (if any) shall be as follows: .............................................

Contract Duration, Purchase Price, and Date

The Contract shall commence on: / / and expire on: / / The Parties have agreed that the purchase price of the leased asset shall be: ........................ EGP (Specified Price) (For the transfer of ownership of the asset to the Lessee at the end of the lease contract) The Parties also agreed that the date for purchasing the leased asset shall be no later than: / / ...

Preamble

Whereas the First Party practices the financial leasing activity in accordance with the provisions of Financial Leasing and Factoring Law No. 176 of 2018, and whereas the Second Party has requested the First Party to purchase the leased asset detailed in this Contract and its annex, and to lease this asset to the Second Party Lessee in accordance with the provisions of Law No. 176 of 2018 and the decisions and controls issued in implementation thereof. And after both Parties acknowledged their status and legal capacity to conclude this Contract, they have agreed as follows:

First Party Lessor Second Party Lessee 46076 Financial Regulatory Authority Chairman's Office

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Article No. (1)

The aforementioned preamble constitutes an integral part of this Contract.

Article No. (2)

In the event that the Lessee negotiates directly with the Supplier or Contractor regarding the specifications of the leased asset, the Lessee shall be responsible for any error in selecting and specifying the leased asset's specifications. The Lessor shall be responsible for his actions or conduct that lead to an error in selecting the leased asset or to enabling the Supplier, Contractor, or a third party to interfere with the Lessee. Furthermore, the Lessee shall bear civil and criminal liability from the date of receiving the leased asset for any accidents and damages caused by the leased asset to third parties, and shall bear liability for accidents and damages affecting the leased asset resulting from its use during possession. No recourse shall be made against the Lessor for any damages caused by the leased asset throughout the duration of the Contract.

Article No. (3)

The Lessee has the right to purchase the entire or part of the leased asset subject to the following conditions: ............................................. Ownership of the leased asset shall not transfer to the Lessee until he has paid the full price and the agreed rental values, and the Lessor is obligated to draft a sales contract for the leased asset to the Lessee.

Article No. (4)

The Lessee is committed to the following provisions:

• Use, maintain, and repair the leased asset in accordance with the purposes for which it was prepared and according to recognized technical standards and agreed instructions regarding technical specifications to be observed, whether specified by the Lessor, manufacturer, supplier, or contractor.
• Notify the Lessor of any defects that arise in the leased asset preventing its use in whole or in part, in accordance with the procedures stipulated in the Contract.

First Party Lessor Second Party Lessee 46076 Financial Regulatory Authority Chairman's Office

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• Pay the agreed rental value in the Contract according to the conditions and deadlines mentioned above.
• Not dispose of the leased asset in whole or in part without obtaining written consent from the Lessor; any disposal by the seller or possessor to whom the asset was transferred in violation thereof shall be null and void, and the Lessor shall have the right to recover the asset.
• Continue paying the rental or agreed price at the specified deadlines in the event that the Lessor continues due to the Lessee's fault, taking into account any insurance amounts the Lessor may receive.

Article No. (5)

The Lessor is committed to the following provisions:

• Deliver the leased asset to the Lessee or authorize the Lessee to receive it via a receipt signed by the Lessee and the manufacturer, supplier, or contractor, confirming the condition of the leased asset, any defects found, and all relevant data and its status at the time of receipt. In this case, the Lessee shall be liable to the Lessor for any data regarding the asset included in the receipt.
• Not interfere with the Lessee's possession in its private state, or enable the Lessor, manufacturer, supplier, contractor, or third party to interfere with the Lessee. The Lessor shall be responsible for his actions or conduct that prevent the Lessee from benefiting from the leased asset.
• Notify the Lessee of the entities to which rights arising from the Contract are assigned or transferred.
• Maintain confidentiality regarding the Lessee's data and not disclose any information about them or their transactions to third parties without their prior written consent and within the scope of this consent. Exceptions include cases where the Financial Regulatory Authority requests any data or documents related to financial leasing or relevant to the Contract, as well as regulatory, judicial, rating agencies, credit information companies, and entities practicing securitization or refinancing activities, as mandated by laws.

First Party Lessor Second Party Lessee 46076 Financial Regulatory Authority Chairman's Office

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Article No. (6)

The Lessor shall mark his ownership of the leased asset, the contract number, and the contract registration date in the Authority's Contract Register, ensuring the marking is clear and in a conspicuous place. The Lessee shall not conceal or deface this marking throughout the duration of the Contract. The Lessor or his representative shall have the right to periodically inspect the leased asset to verify its integrity and use for its designated purpose once every (month/quarter/half-year/year) ...........................

Article No. (7)

The Lessor may assign the financial leasing contract to another lessor. This assignment shall not take effect against the Lessee until he is notified thereof, and this assignment shall not constitute any breach of the rights and guarantees granted to the Lessee under the Contract. The Lessor may also assign all or part of his financial rights arising from the financial leasing contract to another lessor, another entity practicing the same activity, or to one of the local banks registered with the Central Bank of Egypt, or to one of the entities licensed to practice securitization activities. The Lessee may also, after obtaining written consent from the Lessor, assign the financial leasing contract to another lessee, in accordance with the conditions stipulated in Article 24 of Financial Leasing and Factoring Law No. 176 of 2018.

Article No. (8)

The financial leasing contract shall be automatically terminated without the need for notice or judicial proceedings in any of the following cases:

1. Failure of the Lessee to pay the agreed rental value at the deadlines and according to the conditions stipulated in the Contract despite receiving a payment reminder, and thirty days passing since the expiration of these deadlines, unless the Parties agree otherwise.
2. Death of the Lessee or the joint and several partner in the lessee partnership company, or the new joint and several partner failing to complete contract execution within thirty days from the date of death.

First Party Lessor Second Party Lessee 46076 Financial Regulatory Authority Chairman's Office

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3. Declaration of the Lessee's bankruptcy or insolvency, or dissolution of the lessee company for any legally prescribed reasons.
4. Dissolution of companies, however, the judgment declaring bankruptcy or insolvency or dissolution of the company may be issued within thirty days from the date of the judgment declaring bankruptcy or insolvency or dissolution of the company, provided that the Lessor's rights are not prejudiced.
5. As stipulated in the Contract and dedicated to paying the rental value at its deadlines. The Parties also agreed to terminate the Contract in the event of ............................ Termination shall be noted in the Financial Leasing Contract Register in accordance with the procedures prescribed for this purpose, and in all cases, the leased asset shall not be included in the general guarantee of creditors.

Article No. (9)

Economic courts shall have jurisdiction over all disputes arising from the breach of any provision of this Contract, including preventive and substantive execution disputes. This shall be replaced with the following text in case of agreeing on arbitration: Jurisdiction shall lie with arbitration bodies to resolve disputes arising between the parties to this Contract.

Article No. (10)

The parties to the Contract acknowledge having selected a specific address for each of them as indicated at the beginning of this agreement. Each of the Lessor and Lessee is obligated to notify the other in case of any change by registered mail with acknowledgment of receipt; otherwise, all notifications and correspondence sent to this address shall be deemed valid and produce their legal effects.

Article No. (11)

This agreement is drafted in three copies, with each party holding one copy for use as needed, and the third copy shall be used to register the financial leasing contract in the register designated for this purpose at the Financial Regulatory Authority.

First Party Lessor Second Party Lessee 46076 Financial Regulatory Authority Chairman's Office

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Factoring Contract

This is on / / corresponding to

This Contract is concluded between:

First: ................... Factoring Company, an Egyptian joint stock company.

• Its headquarters: ................... Commercial Registration No. ...................
• Represented in signing this Contract by Mr./ ................... in his capacity as ...................

(First Party)

Second: ................... or ................... Company

• Its address / headquarters: ...................; practicing activity ................... Commercial Registration/Tax Card No. ...................
• Represented in signing this Contract by Mr./ ................... in his capacity as "..................."

(Second Party)

Preamble

Whereas the First Party Factor practices the factoring activity and is licensed to practice this activity by the Financial Regulatory Authority under License No. (..............), and whereas the Second Party practices a financial activity arising from commercial transactions related to the sale of goods or provision of services and wishes to sell all or part of these rights to the Factor, and after both Parties acknowledged their legal capacity and status to contract, they have agreed as follows:

Article No. (1)

The aforementioned preamble constitutes an integral part of this Contract.

Article No. (2)

The First Party Factor has agreed to purchase the financial rights (current and/or future) subject to this Contract which are owned by the Second Party Seller and which arose or were acquired as a result of practicing the activity mentioned at the beginning of this Contract, and the details of these rights, the conditions for their factoring, and the associated services are detailed as follows: .............................................

First Party Factor Second Party Seller 46076 Financial Regulatory Authority Chairman's Office