Aggregated News From Investment Management Regulators

EFSA Amends the Rules set for Subscription in Investment Funds and Obtaining in-kind shares in return


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• Sherif Samy : Real estate investment funds may  issue certificates for an in-kind share from day one 
• Offering in-kind share requires the approval of two-thirds of the certificates’ holders
• Depositor of the  in-kind share may not waive the Fund’s certificate  that they will hold for two years

Sherif Samy- EFSA’s Chairman revealed that EFSA issued  a decision that  amends  the rules set for subscription in investment funds and obtaining in-kind shares in return. The said decision allows obtaining in-kind shares in form of real estate or contributions in companies in order to activate the system of investment funds and to ensure its rapid start in order to operate effectively from day one.

He pointed out that EFSA’s BOD decision no. (63) Of 2017 stated that the maximum value of the in kind contribution attributed to the size of the Fund is determined by the Fund’s BOD and after gaining the approval of certificates’ holders. Also, the said decision allows subscription in fund’s certificates and obtaining in-kind shares from the first issuance of the fund’s certificates, instead of obtaining the in-kind shares from other issuances.

He pointed out that the amendments approved by EFSA’s BOD will allow obtaining real estate or contributions in companies as soon as the Fund began to practice its activity and closing subscription.  He added that this may give a better perception for those who will invest in fund’s certificates on its work plan and projects in the early stages. Also , the new amendments enable the establishment of real estate investment funds which include unutilized assets owned by public entities for the purpose of  its development by an experienced investment manager.

EFSA’s Chairman  asserted that in cases where an investor submits an in-kind share to subscribe in  the first issuance  of the  fund, the approval of both the company’s  BOD  and the Extraordinary General Assembly shall be obtained  in accordance with  a report that is prepared by  the Investment Manager, provided that a two-thirds quorum is present at the meeting of the General Assembly and that two thirds of the members of the General Assembly are approved after excluding the parties associated with the in-kind quota who are not entitled to vote on the proposal submitted to  the Extraordinary General Assembly.

Sherif Samy stressed that the prospectus or information note should contain full disclosures about these in-kind shares and the fund’s certificates, in particular adequate information on each share, its owners and its value, and the number of certificates to be issued for each share. Also, the prospectus shall include a summary of two evaluation reports on these in-kind shares or the study that is prepared by the independent financial adviser – as the case may be – indicating that the reports are available for consultation with fund and the management company. In addition, it shall include the recommendation and justification of the Fund’s BOD which is approved by the Extraordinary General Assembly for owners of in-kind shares to subscribe in the Fund’s certificates and obtaining in-kind shares and identifying its return.

He added that upon evaluating the in-kind shares, the independent financial advisors or real estate appraisal experts shall comply with the Egyptian Financial Valuation Standards and the Egyptian real estate evaluation standards issued by the Authority – as the case may be – and include them in their evaluation reports.

Sherif Samy stressed that depositor of the in-kind share may not waive the Fund’s certificate that they will hold for two years.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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