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FRA’s Board of Directors grants license to Microfinance Investment Funds to deal in the movable values


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• Dr. Omran: Expanding the scope of “Common Investment Funds (CIFs)” and the possibility of creating charitable funds
• Dr. Omran: The decision includes the recovery controls for charitable funds

In order to ensure the integration of non-banking financial activities under FRA’s supervision and to provide financing to companies, associations and NGOs engaged in microfinance activity, and in order to maximize the benefit of introducing microfinance investment funds , FRA’s Board of Directors approves  granting  license to microfinance investment funds to deal in movable values through purchasing microfinance portfolio from companies and entities licensed to practice microfinance activity.
Dr. Mohammed Omran- FRA’s Chairman said that decision no. (32) of 2018 stipulated that the license granted  to deal in movable  values of  the closed funds which are established and its certificates are especially  offered shall be  in accordance with Article 179 of the Executive Regulations of the Capital Market Law. The Fund shall invest in the movable values through financing the licensed entities to practice microfinance activity.  In addition, the fund’s investment policy stated in the Fund’s Memorandum of Information shall include the determinants under which the Investment Manager may purchase the Micro Finance Portfolio.

On the other hand, Dr. Omran expressed that the approval of FRA’s Board open the way to invest funds in ” Common Investment Funds (CIFs)  ” in all types of investment funds except for the types defined  by the  Authority’s Board of Directors . In a new step to allow the establishment of Charitable Fund , specific recovery  control and transfer of ownership  pursuant to the amendments of Capital Market Law issued in mid-March 2018. The said amendments asserted that the “Common Investment Funds (CIFs)” is investment funds which profits and returns resulting from its investments are limited to be spent on social or charitable purposes through the public or private institutions or government agencies or affiliates related to charitable activities that is in accordance with the prospectus or information note as the case may be.

Dr. Omran explained that the main objective of “Common Investment Funds (CIFs)” was to benefit from the Capital Market Law by providing a pool to collect donations and funds allocated for charitable activities to invest it and use its revenues in such activities. FRA’s Board decision no. 31 of 2018 provides flexibility upon offering fund’s categories to suit the purpose for which it was established for, especially “Common Investment Funds (CIFs)”.

This step comes after two years from the issuance of FRA’s Board decision to establish “Common Investment Funds (CIFs)” in order to meet the continuous need for these kinds of funds to increase the invested funds for social and charitable purposes.

Dr. Omran pointed out that FRA’s Board decision no. 19 of 2016 defined  the social and  charitable purposes for which the profits and returns resulting from “Common Investment Funds (CIFs)”   will be distributed until its expiry, to be one or more of the following: financing Educational institutions  from universities, schools, or other educational institutions licensed to carry out scientific research at home and abroad which serve the Egyptian society in all fields, training and scholarships, social welfare, such as building or operating  orphanages , homeless shelters , students’ hostels , nursing home as well as providing  assistance in cash or in kind to widows , female heads of household , persons with special needs ,  poor families , debtors and  financing the construction or operation of child care centers, youth centers and  sports clubs for the needy.

This is in addition to the health care, including financing the construction, equipping and / or operation of hospitals, health care units and treatment centers, as well as financing all or part of the cost of surgeries, medicines, accommodation or purchasing medicines or medical supplies for those who can not.
And finally the development of poor villages and slums besides all other purposes aimed at the community service and development and approved by the Authority.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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