Financial Regulatory Authority Board of Directors Resolution No. (114) for the Year 2021

Financial Regulatory Authority (FRA)
Chairman of the Authority

Resolution No. (114) of the Authority's Board of Directors dated 5/7/2021 Regarding the Regulations Governing the Operation of Insurance Brokerage and Reinsurance Brokerage Companies

The Board of Directors of the Financial Regulatory Authority Having reviewed:

• Law No. (10) of 1981 on Supervision and Regulation of Insurance in Egypt;
• Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments;
• Resolution No. (23) of 2014 regarding rules governing insurance brokerage activities within the Arab Republic of Egypt;
• Resolution No. (53) of 2018 regarding licensing issuance, renewal conditions, and share ownership rules for companies operating in non-banking financial activities;
• Resolution No. (82) of 2020 regarding the suspension of new licenses for insurance and reinsurance brokerage companies;
• Resolution No. (166) of 2020 defining the term "financial institutions";
  and upon approval by the Authority's Board of Directors in its session held on 5/7/2021;

Resolved:

(Article One)
Without prejudice to Resolution No. (23) of 2014 regarding rules governing insurance brokerage activities within the Arab Republic of Egypt, the regulations stipulated in this Resolution shall apply to the regulation of insurance and reinsurance brokerage companies.

(Article Two)
Companies wishing to conduct insurance or reinsurance brokerage activities shall comply with the following:

1. The proportion of financial institutions in its ownership structure shall not be less than (25%) of its capital, according to the definition of financial institutions in Resolution No. (166) of 2020 mentioned above.
2. At least one of its shareholders must possess expertise in financial or investment activities, particularly in insurance or insurance brokerage.
3. A statement of its plan for using electronic software and technological applications in marketing.
4. A statement of the nature and characteristics of the target sectors, their locations, and corresponding insurance coverage, along with an estimate of premiums collectible from each line of business, its commissions, and their proportion to total revenues.
5. Clarification of its activity areas regarding microinsurance, including opening branches in governorates and rural areas.
6. Opening at least two branches within three years from the commencement of activity, with an insurance broker responsible for each branch.
   The company's business plan for the first three years of operation must include necessary equipment, commission and expense estimates, production costs, and the technical foundations upon which they are based.

Smart Village, Building 136, Giza, Egypt
Postal Code: 1100
Tel: +202 35370035, Fax: +202 35370036
WWW.FRA.GOV.EG
1

(Article Three)
The organizational and administrative structure of companies subject to this Resolution must include at least the following departments:

1. Brokerage Department.
2. Collections Follow-up Department.
3. Issuance Follow-up Department.
4. Claims Follow-up Department.
5. Information Technology (IT) Department.
6. Customer Service Department.
7. Financial and Administrative Affairs Department.
   Each department must have at least one employee, and the Brokerage Department must have no fewer than (2) brokers.

(Article Four)
Companies subject to this Resolution must comply with the following regulations when forming their boards of directors:

1. The composition must include at least two members with expertise in insurance or insurance brokerage, one of whom is an executive member (the Managing Director) and the other from independent members.
2. No board member shall serve on the board of another company conducting the same activity, or any insurance company operating in Egypt, nor be an employee thereof in any capacity.
3. Submission to the Authority of board member data, specifically: name, address, nationality, qualification, specialization, board position, prior experience (especially in insurance), and shareholding percentage.
4. Disclosure of whether any board member is related up to the second degree with other board members or shareholders, or has common interests/benefits with any of them.
   The Authority must be notified immediately upon any change in the aforementioned data.

(Article Five)
Data regarding shareholders of companies subject to this Resolution must be disclosed as follows:
First: For natural persons:

• Name, address, and a copy of the national ID for Egyptians or passport for foreigners.
• Academic qualifications and practical experience in the company's field or insurance generally.
• Shareholding percentages in the company's capital, and quantity/proportion of traded shares.
  Second: For legal entities:
• Name, legal form, founding law, nationality, and nature of the activity conducted.
• Authorized, issued, and paid-up capital value for companies.
• Persons managing the legal entity and authorized signatories.

Smart Village, Building 136, Giza, Egypt
Postal Code: 1100
Tel: +202 35370035, Fax: +202 35370036
WWW.FRA.GOV.EG
2

• Latest annual financial statements of the legal entity, accompanied by an auditor's report.
• Ownership structure for companies (a statement listing all owners of 10% or more of ownership or voting rights); if this statement includes legal entities owning over 50% of the company's capital or voting rights, their respective data as listed in the above items must also be provided.
  Third: The extent of relationships up to the second degree or common interests/benefits with any company shareholders.
  Fourth: Any shareholdings in other brokerage companies, or whether they hold board memberships or are employees thereof.
  In all cases, insurance or reinsurance companies, or their employees, are prohibited from participating in the establishment of insurance or reinsurance brokerage companies. Furthermore, employees of the aforementioned brokerage companies are prohibited from working for other companies conducting the same activity simultaneously.

(Article Six)
The continued availability of ownership structure, organizational and administrative structure requirements, as well as the expertise and conditions of company management stipulated in this Resolution, constitutes one of the conditions for license renewal to conduct the activity. The transfer of shares of existing insurance or reinsurance brokerage companies is subject to compliance with the conditions for natural and legal persons as stipulated in this Resolution, and the new ownership structure must align with Item (1) of Article Two.

(Article Seven)
In matters not specifically addressed in this Resolution, the provisions of Resolution No. (53) of 2018 regarding licensing issuance, renewal conditions, and share ownership rules for companies operating in non-banking financial activities shall apply.

(Article Eight)
This Resolution shall be published in the Egyptian Gazette and on the Authority's electronic website, and shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors
Dr. Mohamed Omran

Smart Village, Building 136, Giza, Egypt
Postal Code: 1100
Tel: +202 35370035, Fax: +202 35370036
WWW.FRA.GOV.EG
3