Head of the Authority Decision No. 1242 for the Year 2020

FINANCIAL REGULATORY AUTHORITY

Head of the Authority

Decision No. (1544) for the Year 2020
Dated 11/11/2020

Regarding the approval of the new Articles of Association for the Egyptian Pool for Civil Liability Insurance against Construction Risks

Head of the Financial Regulatory Authority

Having reviewed:

• Law No. 10 of 1981 on Supervision and Control of Insurance in Egypt and its Executive Regulations;
• Law No. 10 of 2009 on the Organization of Non-Banking Financial Markets and Instruments;
• Law No. 106 of 1976 on Directing and Regulating Construction Works and its Executive Regulations;
• The Memorandum of Association of the Egyptian Pool for Civil Liability Insurance against Construction Risks, dated 29/4/2003;
• Authority Decision No. (170) of 2003 establishing the Egyptian Pool for Civil Liability Insurance against Construction Risks and approving its Articles of Association;
• The Articles of Association of the Pool and its amendments;
• The minutes of the General Assembly meeting of the Pool held on 16/8/2020;
• The memorandum prepared by the Licensing and Professional Supervision Sector on this matter.

Has decided:

Article 1:
The new Articles of Association of the Pool attached to this Decision are hereby approved.

Article 2:
This Decision and the new Articles of Association of the Pool shall be published in the Official Gazette and on the Authority's website. This Decision and the Articles shall come into force the day following their publication in the Official Gazette.

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

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Articles of Association of the Egyptian Pool for Civil Liability Insurance against Construction Risks

Preamble
Having reviewed Law No. 10 of 1981 issuing the Law on Supervision and Control of Insurance in Egypt and its Executive Regulations issued by Minister of Economy and International Cooperation Decision No. 362 of 1996, as well as the Memorandum of Association establishing the Pool for Civil Liability Insurance against Construction Risks dated April 26, 2003, and Authority Decision No. 170 of 2003 dated 5/5/2003 registering the Pool.

And based on the developments that have occurred in the insurance sector, it has been decided to amend the current Articles of Association of the Pool to align with these developments. The member companies have agreed to the provisions of the following articles as the Articles of Association of the Pool.

Article (1)
Establishment of the Pool
The Egyptian Pool for Civil Liability Insurance against Construction Risks was established in accordance with the provisions of the Law on Supervision and Control of Insurance issued by Law No. 10 of 1981 and its Executive Regulations, and Law No. 119 of 2008 issuing the Unified Construction Law, and other applicable laws - between:

First: Founding Companies:

1. Misr Insurance Company (merged with both Al-Sharq Insurance Company and Al-Ahliya Insurance Company)
2. Suez Canal Insurance Company.
3. Al-Muhandis Insurance Company.
4. Delta Insurance Company.

Second: Member Companies:

1. GiG - Insurance - Egypt (GiG)
2. Egyptian Saudi Insurance House.
3. Royal Insurance.
4. Eskan Insurance Company.
5. Allianz Insurance - Egypt.
6. AIG - Egypt - Insurance.
7. Egyptian Takaful Insurance for Property and Liabilities.
8. Tokyo Marine General Takaful Company.

Any other insurance company may join the Pool's membership in accordance with its Articles of Association (the Pool's Articles of Association) and under the conditions set by the General Assembly of the Pool, provided that the joining companies have no rights to the Pool's assets and do not bear any obligations related to the period prior to the date of joining.

Article (2)
Non-Profit Objective
The Pool does not aim to achieve profits and does not bear any losses from conducting its operations, without prejudice to its role in investing available funds for the benefit of the members.

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Article (3)
Head Office
The Head Office of the Pool is in Greater Cairo, and it may establish branches within the Arab Republic of Egypt.

Article (4)
Objectives of the Pool
The Pool manages business related to insurance coverage for clients requesting insurance policies for civil liability arising from risks resulting from construction works in accordance with the provisions of Law No. 119 of 2008. The Pool takes all measures necessary to achieve its objectives for the benefit of the member insurance companies, and specifically:

1. Reviewing structural and architectural designs and drawings of building projects submitted by natural and legal persons for the purpose of issuing civil liability insurance policies against construction risks, through the Pool's engineering department or specialized consulting engineering offices registered with the Ministry of Housing. The Pool approves such designs and drawings upon verifying their integrity and compliance with technical standards, and may provide comments to them and notify insurance policy applicants to remove the causes thereof.
2. Managing the insurance process for civil liability risks of construction works, including issuing insurance policies and paying compensation on behalf of and in the name of the member insurance companies.
3. Collecting insurance premiums and review fees. Deductions on net premiums collected by the Pool are paid to the relevant authorities - the Financial Regulatory Authority (6 per thousand supervision and control fees + 1 per thousand for policy approval and amendment services + 2 per thousand policyholder protection fund) and the Tax Authority (relative stamp duty for the client's share and the company's share) and the specific tax.
4. Field monitoring of construction works for which insurance policies have been issued to verify that the executed works match the approved designs and drawings.
5. Notifying the owner, engineer, and contractor of technical observations on construction works. If the observations pose a danger to the safety of the building, the Pool's management must notify the building owner and the Technical Inspection Authority for Construction at the Ministry of Housing, Utilities, and Urban Communities, and the competent regulatory authority.
6. Examining and studying compensation claims submitted by the injured parties or their heirs or agents to determine the amounts payable to the beneficiaries in accordance with the insurance policy conditions.
7. Determining the shares of member companies in paid and pending settlements and related expenses.
8. Preparing financial statements, including the joint account, including premiums distributed according to the shares of member companies, minus their share in compensation.
9. Utilizing appropriate technical expertise to develop safety and security measures to reduce insured risks.
10. Establishing and/or purchasing and/or renting the necessary premises for the Pool to conduct its operations, and equipping them with appropriate furniture, devices, and communication networks.

Article (5)
Conducting Operations
The Pool may engage specialized consulting engineering offices to assist it in reviewing structural and architectural designs and drawings of buildings for which civil liability insurance policies are required to be issued against risks arising from their execution, as well as in the field monitoring of the execution of these buildings. These offices must be listed in the lists issued by the competent Minister's decision, taking into account the office's specialization and the spatial scope of its operations.

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Article (6)
Managing the Insurance Process
The Pool directly manages the insurance process for clients requesting civil liability insurance policies against construction risks on behalf of the member companies in accordance with the provisions of Law No. 119 of 2008 issuing the Construction Law. It collects premiums for these policies and pays compensation for bodily and material damages to the entitled parties, all in accordance with the conditions stipulated in the insurance policies issued for this purpose.

Article (7)
Membership
Every insurance company conducting civil liability insurance against construction risks must be a member of the Pool. No company is allowed to conduct this type of insurance outside the Pool.

Article (8)
Composition of the General Assembly
The General Assembly of the Pool is its supreme authority and consists of the chairmen of the boards of directors of the member insurance companies or their deputies or authorized members. The General Assembly is chaired by the Chairman of the Egyptian Insurance Federation or his deputy.

Article (9)
Competences of the General Assembly
The General Assembly of the Pool is competent for the following:

1. Setting the general policy of the Pool and plans ensuring the achievement of its objectives, and monitoring the implementation of these plans.
2. Approving the regulations established by the Administrative Committee.
3. Approving the estimated budget.
4. Approving the annual report on the Pool's activities.
5. Approving the balance sheet and final accounts based on the annual report.
6. Electing members of the Administrative Committee and determining attendance allowances for committee meetings.
7. Approving the appointment of a full-time executive manager for the Pool and determining his salary and financial allowances.
8. Appointing an auditor and determining his fees, provided that he is among the auditors registered in the records of the Financial Regulatory Authority.
9. Determining and redistributing shares of civil liability insurance against construction risks among member companies in the event of a new member joining or a member leaving, subject to submission to the Financial Regulatory Authority for approval.
10. Proposing amendments to the Articles of Association and submitting them to the Financial Regulatory Authority.
11. Considering the dissolution of the Pool and liquidation of its assets, and issuing necessary decisions in accordance with the law after submission to the Financial Regulatory Authority.
12. Considering any other matters related to the Pool's activities.

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Article (10)
Convening the General Assembly
The General Assembly of the Pool holds at least one annual meeting upon invitation from its chairman or upon request from half of its members or the Administrative Committee. The meeting is not valid unless a simple majority of the Assembly members (50% + 1) are present. Decisions are issued by a majority of the votes of the attending members, except for decisions related to amending the Articles of Association or dissolving the Pool, which are issued with the approval of three-quarters of the Assembly members. Each member of the Assembly has one vote. Without prejudice to the provisions of Law No. 10 of 1981 issuing the Law on Supervision and Control of Insurance and its Executive Regulations, the Financial Regulatory Authority must approve the minutes of the General Assembly meeting within thirty days for its approval. The General Assembly's decisions are not effective unless based on this approval.

Article (11)
Composition of the Administrative Committee
The Pool has an Administrative Committee elected by the General Assembly for a term of three years, with its formation issued by a decision of the Assembly's chairman. It consists of:

1. A Chairman chosen by the General Assembly from among the chairmen of the boards of directors of the founding companies or their deputies or authorized members.
2. Three members representing the other founding companies after excluding the company from which the Chairman is chosen, to be among the chairmen of the boards of directors of these companies or their deputies or authorized members or among holders of senior management positions.
3. Four members representing the other insurance companies that are members of the Pool, to be among holders of senior management positions, selected by election.
4. Two members representing the Ministry of Housing, Utilities, and Urban Communities (Housing and Utilities Sector and the Technical Inspection Authority for Construction), who have the right to access all documents submitted to the Pool regarding the engineering aspect of its work.

Article (12)
Competences of the Administrative Committee
Without prejudice to the competences of the General Assembly, the Administrative Committee is competent for the following:

1. Taking necessary decisions to achieve the Pool's objectives and manage its operations.
2. Approving the organizational structure of the Pool's departments and the functional structure of employees.
3. Proposing systems and regulations related to financial, administrative, and human resources matters and their financial treatment, pending approval by the General Assembly.
4. Preparing the annual report on the Pool's activities within two months from the end of the financial year, pending presentation to the General Assembly. It must include the current account of member companies, the balance sheet, and the estimated budget.
5. Approving contracts concluded by the Pool to achieve its objectives, except for sales contracts affecting the Pool's owned premises, which require Assembly approval.
6. Forming the internal audit committee and any other committees required by work, and determining their tasks and the financial treatment of their members and those they engage.
7. Appointing a full-time executive manager for the Pool and determining his salary and financial allowances.
8. Engaging expert consultants with experience from within or outside the insurance sector. If he attends Administrative Committee meetings, he has no voting right. The Administrative Committee determines his financial allowances.
9. Submitting a request to the Chairman of the General Assembly to convene the Assembly.

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Article (13)
Cases of Increased Liabilities or Surplus in Resources If the Pool's liabilities exceed its actual resources at any time, member companies are requested to pay the necessary amounts to face these liabilities according to their shares, within the limits of the Pool's estimated budget. If the required amount exceeds these limits, the matter must be presented to the Assembly Chairman to convene the Assembly to approve this excess. In case of resources exceeding actual uses, the Pool returns the value of the excess - after setting aside a portion determined by the General Assembly to face any deficit that may occur for member companies within a period not exceeding one month from the date of the General Assembly's approval of the annual activity report and balance sheet - in accordance with the rules approved by the General Assembly.

Article (14)
Convening the Administrative Committee
The Administrative Committee meets at least once a month upon invitation from its chairman. The meeting is not valid unless a majority of the Committee members are present. Decisions are issued by a majority of the votes of those present. In case of a tie, the side on which the Chairman is has precedence. Committee decisions are communicated to the General Assembly members.

Article (15)
Representation of the Pool
The Chairman of the Administrative Committee represents the Pool in its dealings with third parties and before administrative and judicial authorities. He may delegate some of his competences to others.

Article (16)
Executive Manager
The Pool has an Executive Manager appointed by the Administrative Committee, with his appointment approved at the next General Assembly meeting. He manages the Pool's affairs through its technical and administrative departments within the powers determined by the Administrative Committee. He attends General Assembly and Administrative Committee meetings but has no voting right in their decisions. He is competent for the following:

1. Implementing Administrative Committee decisions, managing the Pool's affairs, and supervising its employees.
2. Preparing the annual report on the Pool's activities, including the current account of member companies and the balance sheet.
3. Preparing the Pool's estimated budget at least three months before the beginning of the financial year.
4. Proposing the organizational structure of the Pool's departments and the functional structure of its employees, and obtaining their approval from the Administrative Committee.
5. Signing contracts and agreements needed by the Pool to conduct its operations, after their approval by the Administrative Committee.
6. Proposing all necessary regulations and systems to manage work in the Pool and obtaining their approval from the Administrative Committee and supervising their implementation.
   The Administrative Committee may entrust him with any other competences required by the interest of work.

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Article (17)
Authorization Powers
The Executive Manager of the Pool or the person designated by the Chairman of the Administrative Committee has the right to sign individually or jointly on behalf of the Pool. Regarding payment authorizations, checks, and all matters related to financial authorization powers, they are in accordance with the regulations approved by the Administrative Committee.

Article (18)
Financial Year
The financial year of the Pool begins with the beginning of the financial year of the member insurance companies and ends with its end.

Article (19)
Distribution of Surplus and Covering Deficit
If the Pool's operations result in a surplus, it is distributed among member companies according to their shares after presentation to the General Assembly of the Pool. The General Assembly may redistribute shares in light of changes in its composition due to the joining of new members or the departure of existing ones. In case of a deficit, member insurance companies finance this deficit.

Article (20)
Distribution of Shares
The mechanism for distributing shares of civil liability insurance against construction risks is reviewed and approved every three years by a decision of the General Assembly, according to the criteria it establishes for this purpose.

Article (21)
Joint Account
The Pool's management must notify member companies of a copy of the joint account and the balance of each company, whether creditor or debtor, within fifteen days from the following month of each quarter, until the final annual joint account is prepared. Debtor companies must pay what is due to them within a deadline not exceeding the end of the month following the end of the financial year. The final settlement is conducted by the Pool paying the dues of companies with creditor balances.

Article (22)
Tax Obligations
Each member company must show all matters related to civil liability insurance against construction risks, whether income or expense, in its accounts in the miscellaneous accidents and liabilities insurance branch, as well as in its tax declarations. The company bears the taxes due on this activity and pays them with its knowledge. Member companies must provide the Pool annually with proof that their tax base includes all matters related to construction liability insurance as an expense.

Article (23)
Supervision of Pool Accounts
The auditor registered in the auditors' register at the Authority reviews the Pool's accounts annually. The Insurance Account Supervision Administration at the Central Audit Organization also reviews the Pool annually. The Pool's management must make all observations, documents, and data available to the auditor and the reviewers of the Central Audit Organization. The report of each is presented to the General Assembly.

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Article (24)
Bank Accounts
One or more accounts are opened in the name of the Pool at any Egyptian bank registered with the Central Bank of Egypt. All revenues collected by the Pool are deposited therein, and compensation, due amounts, and any amounts necessary for the Pool's operations are paid from it.

Article (25)
Employment Provisions
The provisions of the Labor Law apply to employees of the Pool in matters not covered by specific provisions in its employee regulations.

Article (26)
Joining the Pool's Membership
An insurance company licensed by the Financial Regulatory Authority - after the date of entry into force of these Articles - to conduct insurance against miscellaneous accidents and related liabilities, or in the event of liquidation of the activity of any member company, the Chairman of the Administrative Committee must present the situation to the General Assembly to consider redistributing the member company's share to the remaining members due to his departure from membership. Any member company may request withdrawal or reduction of its share in favor of the remaining members - without specifying a particular member - without prejudice to its obligations and liabilities until the date of withdrawal or reduction. The member company must notify the Chairman of the Administrative Committee in writing of its wish to do so at least three months before the end of the financial year, pending presentation to the Administrative Committee and then to the General Assembly to make a decision on it before the end of the financial year.

Article (28)
Dissolution of the Pool
The Pool may not be voluntarily dissolved unless approved by the General Assembly in accordance with Article (9) of these Articles and with the approval of three-quarters of its members, and this approval is endorsed by the Financial Regulatory Authority. In this case, the General Assembly appoints one or more liquidators entrusted with liquidating its assets and how to dispose of them under the supervision of the Authority. In all cases, this does not prejudice the rights of the insured and those dealing with the Pool.

Article (29)
Financial Provisions
The Pool's assets are considered as creditor balances for the founding member companies and are distributed among them in the event of the Pool's dissolution or termination of its purpose, according to the participation ratios that were applied at the time of the Pool's establishment.

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Article (30)
Database
The Pool must establish a database containing all information related to providing insurance coverage for clients requesting civil liability insurance policies against construction risks, and the results of inspections on these works.

Article (31)
The Pool must record its registration number and date with the Financial Regulatory Authority on all documents issued by it.