Prime Minister Mostafa Madbouly has issued a decision to amend some provisions of the Capital Market Law No. 95 of 1992.
The amendments include allowing the issuance of a sukuk programme in several versions, creating and organizing sustainable development investment funds, and expanding the scope of work of traded funds, to complement the efforts of the FRA in improving the business environment in the non-banking financial sector and developing and providing various non-banking financial products and services that meet the needs different types of investors.
Mohamed Farid, Chairperson of the Financial Regulatory Authority, said on Monday that the Prime Minister’s decision to amend some provisions of the Executive Regulations of Capital Market Law No. 95 of 1992 has allowed the issuance of a total program of sukuk to be offered in several issuances according to the controls that were issued by the Authority’s Board of Directors, provided that the program is implemented within three years from the date of the Authority’s approval of the issuance program, or within the period specified by the Authority’s decision, whichever is less, without the need to obtain the approval of the Authority’s Board of Directors each time when wishing to issue any new sukuk for the same beneficiary company and the project described in the program.
It added that the prospectus or information memorandum should disclose all details of the program, risks, undertakings and obligations of all parties to the issuance process and the project subject to issuance, in order to facilitate the economic entities wishing to develop their business and expand through the issuance of sukuk for financing, by reducing the time frame and cost.
The amendments permitted the issuance of sukuk without preparing the credit rating of the beneficiary and the issuance or one of them in cases in accordance with the controls issued by a decision of the Board of Directors of the Authority, which gives greater flexibility in not requiring a credit rating in cases that are commensurate with the nature of the sukuk to be issued and the subscribers in it, which is a matter of This will reduce the cost of issuing bonds.
Farid indicated that the amendments stressed on the companies operating in the field of securities the need to adhere to the governance rules issued by the Board of Directors of the Authority to raise the efficiency of corporate management and protect the rights of the company’s shareholders, especially in light of what the practical reality showed regarding the decrease in problems faced by companies applying corporate governance principles that do not apply these principles.
He explained that the amendments expanded the scope of traded investment funds, provided that they follow a reference index approved by the Authority, and its documents may be traded in the Egyptian stock exchanges according to the controls issued by the Board of Directors of the Authority to provide liquidity on documents to allow trading on documents in a way that facilitates investors’ dealings with them and contributes to expanding the base Clients.
The amendments also introduced a new type of investment funds, namely sustainable development investment funds, to encourage this type of investment to keep pace with the latest developments in this type of funds aims to invest in economic activities related to green projects or projects that take into account environmental and social dimensions, provided that the FRA’s board of directors controls the work of these funds, investment rates, and data that must be included in the fund’s articles of association, subscription prospectus, or information memorandum, as the case may be, in particular the economic activities in which the fund aims to invest, the conditions that must be available in those investments, the related risks, and the policy followed to mitigate or limit those risks, and the methodology used to evaluate the performance of the fund and measure the extent to which it achieves its objectives. The Chairperson of the Authority issues a model of articles of association for this type of fund.
The amendments also made it possible for investment funds to market the fund’s documents through brokerage firms or other companies that have a license from the Authority to do so, provided that a register is established in the Authority that includes the names of companies wishing to market the Fund’s documents, provided that the registration and deletion in the register takes place in accordance with the controls issued by the Board of Directors of the Authority. This amendment coincides with the recent decisions issued by the Authority regarding activating the use of financial technology in non-banking financial activities, namely Resolutions 139, 140 and 141, which would pave the way for the start of a new era for the non-banking financial sector using financial technology, which is a major driver to facilitate access on non-banking financial services for different segments of society to support the requirements of the national economy to achieve financial inclusion.
