The Financial Regulatory Authority (FRA) has issued several new controls for non-banking financial activities, foremost among which is raising the percentage of women’s representation in the boards of directors of companies and entities working in the field of insurance and non-bank financing activities.
This step is in line with the previously issued decisions to empower women in the boards of directors of companies subject to the authority’s oversight.
With the board of directors’ approval of the first issues presented on women’s empowerment, Mohamed Omran, Chairperson of the FRA, issued Resolution No. (48) of 2022 regarding raising the percentage of women’s representation in the boards of directors of the six Egyptian federations of companies and entities working in the field of insurance, and non-bank financing activities, to 25% of boards, or at least two women. These activities include the fields of mortgage finance, financial leasing, factoring, SME finance, and consumer finance.
The agenda of the closing meeting of the board included considering the conditions and procedures required for the authority to grant its approval to provide licensing to companies and entities wishing to engage in non-banking financial activities through financial technology techniques. This activates the provisions of the articles of the law regulating and developing the use of financial technology in non-banking financial activities, according to Law No. (5) for the year 2022.
Omran noted that the practitioners of non-bank financial activities using digital financial technology were divided, according to the law, into two categories: The first is companies wishing to engage in non-bank financial activities through digital financial technology. These companies will fully operate using digital technology, after they are established and licensed by the Authority in accordance with the law.
With regard to the first category, he said that the authority’s board of directors set the controls for conducting an activity through digital financial technology techniques. These controls include the condition that the company takes the form of an Egyptian joint stock company, according to what the law stipulates. The capital of non-banking financial activities shall not be less than its issued and paid-up capital, according to the case of companies wishing to engage in non-banking financial activities.
He demanded that at least 50% of a company’s founders must be juridical persons, and the share of financial institutions should not be less than 25% of its capital, taking into account that the formation of its board of directors must comply with the executive rules of corporate governance issued by the Authority’s board.
Regarding the second category, which represents companies and entities currently licensed by the Authority to engage in any non-banking financial activities, and wish to engage in these activities through using financial technology, Omran said that they shall receive the FRA’s approval to use these modern technologies themselves by filling in a digital form prepared by the authority as an application. With this application, the digital business models and their applications should be attached, along with a guide that includes technical documentation of equipment, technological infrastructure, information systems, means of security and insurance used in carrying out the activity, and an insurance policy against cyber risks issued by an insurance company,
He added that the current practitioners of non-banking financial activities wishing to use some areas of financial technology can seek the assistance of a third party to undertake some tasks or activities on behalf of the company that has a license to practice the activity. This must be done in accordance with an outsourcing agreement concluded between them in this regard. The Authority should be provided with a copy of the SLA Service Level Agreement. Moreover, it is essential to disclose whether a member of the Board of Directors or the main shareholders of the company or the entity wishing to engage in its activity using technology is a spouse or a second-degree relative of a member of the outsourcing company’s board of directors, or who owns shares in the capital of the outsourcing company.
