Ministry of Investment

The Minister

Decision

Minister of Investment

No. (294) for the year 2007

The Minister of Investment;
Having reviewed the Capital Market Law issued by Law No. 95 of 1992, and its amendments, and the Presidential Decision No. 231 of 2004 regarding the organization of the Ministry of Investment, and the Decision of the Minister of Economy and Foreign Trade No. 135 of 1993 issuing the Executive Regulations of the Capital Market Law and its amendments, and based on what was presented by the Chairman of the General Authority for the Capital Market.

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Decided

(Article One)

A new section titled "Section Six – Index Funds" shall be added to Chapter Two of Part Three of the Executive Regulations of the Capital Market Law issued by the Decision of the Minister of Economy and Foreign Trade No. 135 of 1993, commencing with Article (183) bis and ending with Article (183) bis (6).

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(Article Two)

This Decision shall be published in the Egyptian Gazette, and shall take effect from the day following its publication date.

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Minister of Investment
Dr. Mahmoud Mohieldin

Dated: 20/6/2007
Marwa

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Section Six

Index Funds

Article (183) bis

For the purposes of applying the provisions of this Section, "Index Funds" refers to investment funds that issue documents against a portfolio in which the majority of the constituent securities follow one of the price indices on the stock exchanges.

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Article (183) bis (1)

Establishment of the Fund

Joint stock companies established in accordance with the provisions of the Capital Market Law issued by Law No. 95 of 1992, wishing to establish an index fund, shall submit an application to the Authority, which shall include and be accompanied by the data and documents stipulated in Article 144 of these Regulations, in addition to the following:

• The name of the target index for the issuance process.
• Approval from the entity under whose name the index is registered.
• The expected issuance volume and its currency.
• The expected number of documents to be issued and their par value.
• Evidence of contracting with at least two market makers.

The Authority shall issue its approval of the application within one week of receiving the complete documents.

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Article (183) bis (2)

Funding the Fund's Capital

Subject to the maximum limit of funds invested in the Fund as stipulated in Article (150) of these Regulations, the entire or part of the Fund's capital may be funded by the company that has obtained the Authority's approval to establish the Fund, either independently, in partnership with others, or through a public subscription.

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Article (183) bis (3)

Subscription Prospectus

The subscription prospectus for the documents issued by the Fund must include, in addition to the data stipulated in Article (154) of these Regulations, the following data:

• The name of the bank or company establishing the Fund.
• The target index for the issuance process.
• The names of the market makers contracted upon the establishment of the Fund.
• The par value of the document, which shall not be less than ten pounds and shall not exceed one thousand pounds.
• The method for valuing the issued documents based on the net asset value calculation.
• The method for the periodic valuation of the Fund's assets.

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Article (183) bis (4)

The company establishing the index fund shall contract with at least two market makers, whose role shall be to trade the issued investment documents, provided that the contract includes the rights and obligations of both parties, and specifically the provisions for the issuance and redemption of documents, and it shall be noted that the market maker shall:

• Form a portfolio of securities constituting the target index for the issuance process, representing a certain percentage of the total securities constituting the portfolio, by using the available funds subscribed to, and keeping the remainder of the subscribed funds in the form of liquidity, in accordance with the rules established by the stock exchange and approved by the Authority.
• Deposit the securities constituting the portfolio with a custodian on behalf of the Fund.
• Aggregate the securities constituting the index from the market, reflecting the creation unit (at least five thousand documents) and its multiples, and deposit them with the custodian on behalf of the Fund for the purpose of exchanging them with the investment manager for newly issued circulating documents at a price equal to the document's share of the Fund's net assets.
• Aggregate the circulating documents from the market, reflecting the creation unit (at least five thousand documents) and its multiples, and deposit them with the custodian on behalf of the Fund for the purpose of exchanging them with the investment manager for the securities constituting the index at a price equal to the document's share of the Fund's net assets.

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Article (183) bis (5)

Listing Index Fund Documents on the Stock Exchange

Index funds shall be listed on the stock exchange table upon the company's request, in accordance with the rules for listing and delisting securities.

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Article (183) bis (6)

Obligations of the Investment Manager

The investment manager shall be committed to the following:

• Continuously maintain a correlation coefficient between the trading price of the document on the stock exchange and the value of the index, in accordance with the rules established by the stock exchange and approved by the Authority.
• Continuously maintain that the proportion of securities constituting the index does not fall below a certain percentage of the total securities constituting the portfolio, in accordance with the rules established by the stock exchange and approved by the Authority.
• Calculate the net asset value of the Fund and disclose it to the Authority and the stock exchange.
• Disclose the document's share of the Fund's net asset value, and notify both the Authority and the stock exchange thereof daily after the trading session.
• Notify both the Authority and the stock exchange of the dates and values of coupon distributions and disclose this on the stock exchange screens.
• Notify both the Authority and the stock exchange in writing and immediately of any changes in the number of documents, the temporary suspension of exchanging documents for the securities constituting the index and vice versa, and any material events that could affect the Fund's performance and activities, or may lead to the liquidation of the Fund, its merger into other funds, the termination of an existing merger, or any subdivision operations involving the documents issued by the Fund.

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Continuation of Minister of Investment Decision No. (294) for the year 2007

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Marwa