General Authority for Financial Supervision

FRA Board of Directors Decision No. 64 of 2015

Dated 31/5/2015

on the Conditions and Requirements for Licensing for Conducting Real Estate Financing or Refinancing Activities

The Board of Directors of the General Authority for Financial Supervision Having reviewed the Law on Joint Stock Companies, Limited Partnerships with Shares, and Limited Liability Companies issued by Law No. 159 of 1981 and its executive regulations; and Law No. 148 of 2001 on Real Estate Financing, amended by Presidential Decree No. 55 of 2014; and Law No. 10 of 2009 concerning the regulation of supervision over non-Egyptian markets and financial instruments; and Presidential Decree No. 197 of 2009 issuing the Statute of the General Authority for Financial Supervision; and the Executive Regulation of the Real Estate Financing Law issued by Cabinet Decree No. 1 of 2001 and its amendments issued by Cabinet Decrees No. (1, 2) of 2015; and the Memorandum from the Central Administration for Supervision and Oversight of Licensed Financing Companies No. 75/5/2015; and the positions of the Authority's Board of Directors at its meeting held on 31/5/2015;

---

Article (1)

General Licensing Conditions for Companies Conducting Real Estate Financing or Refinancing Activities

Companies seeking a license from the Authority must meet the following general conditions for conducting real estate financing or refinancing activities:
The following general conditions must be met:

1. It must take the form of an Egyptian joint stock company.
2. The company must have auditors registered in the Authority's Auditors Register.
3. None of the company's founders, board members, or managers shall have previously been convicted of bankruptcy, insolvency, a felony, or a misdemeanor involving moral turpitude, unless their reputation has been restored.
4. The Chairman and the majority of board members must have at least five years of practical experience in banking, finance, law, or education.
5. The board's composition must include at least two independent members as defined in Article Four of this Decision.

---

Article (2)

Special Licensing Conditions for Real Estate Financing Companies

The following conditions are required to obtain a license from the Authority to conduct real estate financing activities:

1. The company's application must specify the conduct of one or more real estate financing activities.
2. The company's issued capital must not be less than EGP 50 million, with at least one-quarter paid up at incorporation; the real estate financing company must commit to increasing its paid-up capital to at least EGP 50 million within one year from its commercial registration date.

---

Article (3)

Special Licensing Conditions for Real Estate Refinancing Companies

The following conditions are required to obtain a license from the Authority to conduct real estate refinancing activities:

1. The company's application must be limited to the real estate refinancing activity.
2. The company's issued capital must not be less than EGP 250 million, with at least half paid up at incorporation; the company must commit to completing its paid-up capital to at least EGP 250 million within three years from its commercial registration date.
3. The shareholding of legal entities must not be less than 75% of the capital, and the shareholding of financial institutions must not be less than 50% of the capital.
   Financial institutions refer to companies and entities subject to the supervision of the Central Bank of Egypt, the General Authority for Financial Supervision, or those subject to the supervision of foreign regulatory bodies or authorities. Exercise full authority of the Central Bank of Egypt or the Authority.

---

Article (4)

Definition of an Independent Board Member

An independent board member is a natural person who meets all of the following conditions:

1. He does not work and has not previously worked in any capacity with the company, a sister company, or a subsidiary during the three years preceding his nomination date.
2. He does not receive bonuses, allowances, or any other monetary or in-kind compensation from the company.
3. Or any sister or subsidiary company, other than those in which he serves as a non-executive board member.
   He, his spouse, minor children, and relatives up to the third degree do not own shares exceeding 1% of the company's capital.
4. He has no familial relationship up to the fourth degree with any board member.
5. He has no direct or indirect commercial dealings with the company, sister companies, subsidiaries, or shareholders holding more than 5%.
6. He has no interest that could affect his performance of duties or conflict with the company's interests.

---

Article (5)

Licensing Application Procedures

The licensing applicant company must complete the designated application form, which must include at least the following data:

1. Applicant's name, title, gender, and chosen address.
2. Company name, legal form, headquarters, and purpose.
3. Details of the licensed, issued, and paid-up capital.
4. Details of shareholders and subscribers (natural or legal persons) owning 1% or more of the company's capital, including their nationality and shareholding percentage.
5. Details of the names of the Chairman, board members, Managing Member, or CEO, and their nationalities.

The application form must be submitted to the Authority accompanied by the following documents:

1. The company's draft articles of association and bylaws.
2. A recent copy of the company's commercial register.
3. A copy of the company headquarters' possession document, whether leased or owned.
4. Receipt proving payment of the licensing fee.
5. Details of shareholdings representing at least 10% in any other financial institutions operating in Egypt, and institutions or shareholders whose ownership exceeds 10% of the company's shares.
6. A certificate stating that no bankruptcy or insolvency judgment has been issued against any of the company's shareholders, Chairman, board members, or managers, unless their reputation has been restored. Non-Egyptians may submit a substitute declaration certified by the competent authority in their country and authenticated by the Egyptian Ministry of Foreign Affairs or one of the Arab Republic of Egypt's consulates in that country.

---

Article (6)

The continuation of a real estate financing or refinancing company's license in the event of share transfer requires the continued fulfillment of the conditions stipulated in this Decision.

Article (7)

This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its issuance. Any provision conflicting with its terms is hereby repealed.

Chairman of the Board
Sherif Samy