Aggregated News From Investment Management Regulators

A new deadline for regularizing the situation of financial leasing and factoring companies

Report/Flag

Please complete the required fields.



• Dr. Omran: FRA issues all the executive decisions necessary to activate the provisions of the law regulating financial leasing and factoring

• Dr. Omran : The new deadline is conditional on submitting a time plan to what has been implemented and the actions that will be taken within six months

• Dr. Omran: We are keen to issue rules and regulations governing the work of companies licensed to practice financial leasing and factoring to ensure the proper functioning of the company and guarantee the rights of clients and creditors

Dr. Mohammed Omran – FRA’s Chairman revealed that FRA’s BOD has  issued a decision regarding extending the deadline granted to the companies subject to the provisions of the Law no. 176 of 2018 on regulating Financial Leasing and Factoring Activities to regularize their situation  for new six months starting from the 14th  of next February. Financial leasing and factoring companies shall inform the Authority -no later than the end of March 2019- whether it will regularize its situation or not in accordance with provisions of Law no. 176 of 2018 on regulating Financial Leasing and Factoring Activities and decisions issued by FRA’s Board.   In addition, if the company agrees to regularize its situation, then it shall submit to FRA a program attached to a time plan of the measures taken or will be taken by the company to regularize its situation.

Dr. Omran said that FRA’s BOD approved – at the last session dated 20 January- the rules and regulations that govern companies licensed to practice financial leasing and factoring.  The said decision defined the minimum requirements for the proper functioning of the company and guaranteeing the rights of clients and creditors. Besides, the decision stressed on preparing an integrated internal control for the company includes set of policies, procedures, evidence and regulations approved by the company’s BOD to ensure the effective application of governance rules.

DR. Omran stressed on the necessity of complying with credit-granting criteria stated in FRA’s BOD decision no. (7) of 2019 . Also, the company’s internal work system shall have the minimum necessary risk management controls, especially the risks related to capital adequacy rules.  Moreover, financial leasing and factoring companies shall have information technology infrastructure, information systems, databases and appropriate office equipment necessary for practicing the activity, which must be consistent with the size of the company’s activity and the number of its clients in order to enable it to obtain the required periodical reports.

Dr. Omran asserted that by the issuance of FRA’s BOD decision no.7 of 2019, FRA has completed the issuance of all controls and executive decisions that shall activate the provisions of the said law. He added that the decisions issued during 2018 , defined the conditions that must be met by the companies wishing to obtain the initial approval to establish a company that shall practice financial leasing or factoring or more of the financing activity.  Also, the decision stipulated that the company shall take the form of an Egyptian joint stock company and the founders of the company shall include legal persons by not less than 50% of the company’s capital.  The decision stated that financial institutions’ contribution shall not be less than 25% of the company’s capital, as well as a feasibility study including the company’s business plan and vision to meet the needs of the market, or introducing new financing products or expanding in new geographical areas.

FRA’s Chairman said that the regulatory decisions issued by FRA’s BOD in the last quarter of 2018 were governed by Fit and Proper Principles. These principles will be achieved through obliging the companies wishing to obtain the license to abide by a number of expertise and professional standards. That is besides the need to have experience in one of the areas of banking, financial, financing, or legal work not less than ten years after obtaining a suitable high qualification in respect of the Managing Director or the Executive Director of the company.

Dr. Omran pointed out that the previous decisions issued by FRA’s BOD set the criteria to be used upon granting licenses to microfinance companies, associations and civil institutions to be engaged in micro-financial leasing activities. He added that foremost of which is that the company, NGO or institution shall be engaged in civil work and do not violate Law no. 141 of 2014 or the decisions issued in this respect. Also, it shall not be subjected to any administrative sanctions or precautionary measures (except for the warning) issued by the Authority during the three years prior to the request to add micro-financial leasing to its activity. He added that reasons of warning shall be removed and six months have passed.

In addition, the Authority was keen to complete the issuance of capital adequacy standards for financial leasing and factoring companies before the end of 2018.  Such standards strengthen and enhance the ability of companies to provide financing through credit risk management and the company shall meet the operational risks according to the best international practices of risk measurement methods. Moreover, the standards define capital adequacy, rules for calculating concentration risks and leverage, balance rules between assets and liabilities, liquidity standard, rules set for calculating impairment (allocations) for doubtful financing, debt execution. Also, it defines the periodic statements that shall be submitted by financial leasing and factoring companies.

In addition, the standards define the rules set for preparing financial statements and dates of submission. It sets the dates of submitting the financial statements as of the year 2019. Also, it defines the procedures governing cases of cessation of activity or liquidation of the company’s activity or merger in other companies or acquisition. The said standards sets corporate governance rules for companies licensed to engage in financial leasing and factoring.
 

Source link

Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

Recent Articles

SEC Charges Former Pharmaceutical Global IT Manager in $8 Million Insider Trading Scheme

Washington D.C., Sept. 17, 2021 — The Securities and Exchange Commission today announced insider trading charges against Dayakar R.

SEC Awards $11.5 Million to Two Whistleblowers

Washington D.C., Sept. 17, 2021 — The Securities and Exchange Commission today announced awards of approximately $11.

Issuance of Executive Order Imposing Sanctions on Certain Persons with Respect to the Humanitarian and Human Rights Crisis in Ethiopia; Ethiopia General Licenses and...

The President has signed a new Executive Order Imposing Sanctions on Certain Persons with Respect to the Humanitarian and Human Rights Crisis in Ethiopia.  OFAC has...

CVM suspends registration of 3 subsidized companies

This post was translated by Regulatory.News for informational purposes only; the content below is not an official translation from the regulator. See the content...

CFPB Report: Renters at Risk as COVID-19 Safety Net Ends

Stimulus Checks and Other Payment Relief Linked to Renters’ Financial Stability WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today released a report warning...

Get the latest from Regulatory.News in your inbox!

×