Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

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Decision of the Board of Directors of the Financial Regulatory Authority

No. (79) of 2019 dated 20/6/2019

Regarding the amendment of the Board of Directors Decision No. (114) of 2018

Regarding the conditions and regulations for registering financial advisory companies and licensed entities to conduct financial valuation and fair value studies at the Authority

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The Board of Directors of the Financial Regulatory Authority

Having reviewed the Capital Market Law issued under Law No. (95) of 1992 and its Executive Regulations;

And Law No. (10) of 2009 regarding the regulation of supervision over non-Egyptian markets and financial instruments;

And Presidential Decision No. (192) of 2009 issuing the Basic Statute of the Financial Regulatory Authority;

And Board of Directors Decision No. (114) of 2018 regarding the conditions and regulations for registering financial advisory companies and licensed entities to conduct financial valuation and fair value studies at the Authority;

And the approval of the Board of Directors in its session held on 20/6/2019;

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Has Decided

(Article One)

The text of Article Four of the Board of Directors Decision No. (114) of 2018 regarding the conditions and regulations for registering financial advisory companies and licensed entities to conduct financial valuation and fair value studies at the Authority is replaced with the following:

Without prejudice to the Board of Directors Decision No. (125) of 2015 regarding the experience and competence rules for those managing companies operating in the securities field, it is required that the Managing Director of financial advisory companies, or the person responsible for managing financial advisory services in other licensed entities, who conduct valuation and fair value study preparation, meet the following conditions:

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1. Possess a good reputation and conduct.

2. Hold a higher education degree related to the finance field.

3. Hold an academic or professional certification in fields related to finance and/or investment and/or business administration, as recognized by the Authority, whether Egyptian or foreign.

4. Possess scientific and/or practical experience in financial valuation and fair value determination studies for a period of no less than five years.

In the event that financial advisory companies or other licensed entities wish to outsource their status in accordance with the provisions of this Decision, the Managing Director of the financial advisory companies, or the person responsible for managing financial advisory services in the other entities, as applicable, must possess scientific and/or practical experience in financial valuation and fair value determination studies for a period of no less than five years, having participated during this period in preparing three studies related to financial valuation or fair value determination for enterprises within the three years preceding the outsourcing application.

5. Not have been convicted in the three years preceding registration in the registry of any crime involving moral turpitude or breach of trust, unless their reputation has been restored.

6. Not have been subject to administrative measures by the Authority or other supervisory authorities under its supervision and oversight, as applicable, in the three years preceding registration in the registry.

7. Pass the Authority-approved examinations on topics related to financial valuation, conducted through the Authority or through entities recognized by it.

The Authority may waive the examinations mentioned above based on the academic or professional certifications held.

8. Dedicate full time to management duties.

9. Pass a personal interview at the Authority.

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The following conditions are also required for employees of financial advisory companies, or management members responsible for financial valuation and fair value study preparation in other entities (excluding financial advisory companies):

1. Possess a good reputation and conduct.

2. Hold a higher education degree.

3. Pass a preliminary course introducing the legislative aspects of financial advisory activities and financial valuation standards for enterprises, conducted through the Authority or through entities recognized by it.

4. At least one employee in the company or responsible management in the other entities must have practiced financial valuation and fair value determination studies for a period of no less than three years.

5. Preference is given to obtaining specialized training courses or workshops in financial analysis, or enrolling in one of the internationally recognized programs in financial analysis.

6. Not have been convicted in the three years preceding registration in the registry of any crime involving moral turpitude or breach of trust, unless their reputation has been restored.

7. Not have been subject to administrative measures by the Authority or other supervisory authorities under its supervision and oversight, as applicable, in the three years preceding registration in the registry.

8. Dedicate full time to financial valuation and fair value study duties.

9. Pass a personal interview at the Authority.

Financial advisory companies and other entities registered in the registry must implement a system for quality control, independence verification, and continuing professional education for employees.

Financial advisory companies are also required to appoint an independent internal auditor (or an individual performing the same duties for other entities), who must possess no less than five years of experience in their field, and must be independent from verifying the compliance of the company's shareholders, board of directors, executive management, the appointed valuer, and employees in the aforementioned management with the Authority's basic professional performance standards and financial valuation standards.

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In accordance with the basic professional performance standards and financial valuation standards issued by the Authority.

The Authority may exempt foreign entities wishing to register in the registry from the requirement to pass the personal interview at the Authority and the examinations stipulated in this Article.

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(Article Two)

Item (Z - 3) of Article Five of the Board of Directors Decision No. (114) of 2018 regarding the conditions and regulations for registering financial advisory companies and licensed entities to conduct financial valuation and fair value studies at the Authority is replaced with the following:

Z - 3: Refraining from trading in securities that the company or entity has valued during the six months following the valuation date.

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(Article Three)

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

Financial Regulatory Authority

Dr. Mohamed Omran

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Smart Village, Building no. B-136, Giza, Egypt
Postal Code: 12577
Tel.: +202 35345350 - Fax.: +202 35345350
info@fra.gov.eg

Smart Village, Building no. B-136, Giza
Postal Code: 12577
Tel.: (00202) 35345350 - Fax.: (00202) 35370036
www.FRA.gov.eg