• Sherif Samy: EFSA strike a balance between the need for greater protection of clients’ accounts and considerations of speed dealing
• EFSA’s decision regulate the opening of accounts, dealing, and distribution of profits and activation of dormant account
• EFSA cancelled dealing through individuals’ authorization and allows the power of attorney which does not exceed a period of five years
• Sherif Samy: The account is stagnant after 12 months are passed without dealing through it
• EFSA has stopped working through the powers of attorney that exceeds a period of 5 years as of January 1, 2018
Sherif Samy – EFSA’s Chairman revealed that EFSA’s BOD issued a decision that enhance the protection of clients’ accounts. He added that the said decision includes procedures to be considered upon opening the client’s account, authorization, distribution of profits and dealing with dormant account and minors’ accounts.
He stressed that this decision strike the balance between the need for protecting the accounts and the requirements of speed dealing in the capital market and the importance of the time element. He added that consultations were held with the Egyptian Stock Exchange, the MCDR and a number of entities operating in the market. Recently, EFSA is revising and updating the current instructions in the light of actual application aiming at enhancing protection for clients and their accounts whether cash or securities and reducing the risks that they may face.
Sherif Samy pointed out that decision no. 61 of 2017 affirmed the commitment of all brokerage companies, portfolio management companies and custodians not to sign any contracts or open accounts for their clients through natural persons, as everything shall be held through the client himself. Also, proxies that are used to open accounts for clients are cancelled. He added that selling and purchasing of securities, cash and check deposits and withdrawal, confirmation of correctness and authenticity of statements of account shall be held through a special official or general power of attorney, provided that the following sentence shall be written “dealing with my account at companies operating in the field of securities”. In all cases, purchasing of securities through margin trading or intraday trading shall not be held by the power of attorney. In addition, powers of attorney thatexceed a period of five years may not be relied upon, and so the necessary measures shall be taken to renew these powers of attorney before the end of the mentioned period.
He added that the decision stipulated that EFSA has stopped working through the recent authorizations and all that are related with selling and purchasing of securities, distribution of profits, as of January 1, 2018
On the other hand, the MCDR shall stressed on the fact that distribution of profits or returns that the companies and the centrally deposited entities decide to distribute to their shareholders or holders of their securities according to the method determined by the client through one of the following methods: Transfer to the client’s bank account or issue a bank check on behalf of the client’s and it shall be made only to the first beneficiary, or through the ATM card allocated for the disbursement of the dividends. With exception of the foregoing, the profits or returns referred to may be paid to the companies and entities licensed to margin trading activity.
Sherif Samy explained that according to the decision, the clients’ account shall be stagnant at the brokerage company after 12 months are passed without dealing through it. On the other hand, the client’s account shall be stagnant at the portfolio management company after one month from the expiration of the portfolio management contract with the company. The client’s account shall be activated in order to re-deal through it at the request of the client himself or his agent according to a number of controls and after the account activation form is completed. In addition, brokerage companies shall include in their procedures manual the instructions set for opening and dealing with the accounts, as well as monitoring the stagnant accounts and the procedures for activating them, in a manner that does not prejudice the procedures stated in this decision. Moreover, Auditing Committees of the Board of Directors of these companies shall ensure that their functions include verifying the adequacy of the procedures related to the opening and handling of the accounts, as well as monitoring and activating the stagnant accounts, and ensuring that the internal audit reports indicate that they are being examined.