Regulatory Alerts2019-01-01
Board of Directors Resolution No. (90) of 2019 Regarding the Interpretation of Article Five of Board of Directors Resolution No. (66) of 2009
The Financial Regulatory Authority issued Resolution No. (90) of 2019 to formally interpret Article Five of its 2009 Resolution regarding the calculation of the Development Fee for holding companies with supervised subsidiaries. The directive mandates that revenues from supervised subsidiaries be excluded from the holding company's consolidated income statement when calculating the fee, with specific proportional payment rules applied based on whether subsidiaries are fully or partially supervised. It further clarifies that revenue calculations must align with the company's core business purpose, explicitly excluding nominal profits, provision reversals, depreciation adjustments, foreign exchange fluctuations, and deferred taxes.
Chairman of the Authority
Board of Directors Resolution No. (90) of 2019 dated 2019/7/16
Regarding the Interpretation of Article Five of Board of Directors Resolution No. (66) of 2009
Article Five of Board of Directors Resolution No. (66) of 2009 concerning the Development Fee levied on companies subject to the Authority's supervision shall be interpreted as follows:
(a) For holding companies investing in wholly supervised subsidiaries, the revenues of the supervised subsidiaries shall be excluded from the holding company's consolidated income statement, based on the supervised subsidiaries paying their respective Development Fees according to their individual proportions.
(b) For holding companies investing in partially supervised subsidiaries, the revenues of the supervised subsidiaries shall be excluded from the holding company's consolidated income statement, and the collection of the Development Fee on the remainder of the holding company's total revenues shall remain based on the supervised subsidiaries paying their respective Development Fees according to their individual proportions.
(c) For holding companies investing in wholly unsupervised subsidiaries, revenues shall be calculated based on the total revenues in the income statement within the holding company's consolidated financial statements.
In all cases, the linkage between revenue and the company's purpose must be taken into account (e.g., excluding nominal profits, reversal of provisions, reversal of depreciation, foreign exchange gains/losses, deferred taxes, etc.).
Chairman of the Board of Directors of the Authority
Dr. Mohamed Omran
General Authority for Financial Supervision
FINANCIAL REGULATORY AUTHORITY
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