CHAPTER THREE

SECURITIES INTERMEDIATION COMPANIES
	
SECTION ONE

General Provisions

Article  (27) 

The provisions of this chapter shall be applicable to all securities intermediation companies, being the companies that are engaged in one or more of the activities, which include the following: 

•	Underwriting and promotion of securities
•	Establishing companies which issue securities, or sharing their capital increase
•	Venture capital
•	Clearance and settlement
•	Formation and management of portfolios, and formation of investment funds (mutual funds)
•	Brokerage in securities

The Minister, upon approval by the Board of the Authority, may include other activities related to securities intermediation.    

Applications for the incorporation of these companies shall be submitted to the Authority. The Executive Regulations shall stipulate the rules and procedures governing their establishment, and the rules governing their business, and the practices pertaining to such activities.                           

Article  (28)

The activities specified in the previous article shall not be carried out without the Authority's Licensing and Registration in the registry maintained by the Authority for this purpose.

The Authority shall issue its acceptance or refusal decision within a maximum of 60 days, starting from the date of receiving full documentation. In case the application is refused, the decision must give reasons of refusal. Contesting such a decision should be made to the Contesting Committee specified in chapter five of this law. 

The Executive Regulations shall stipulate the licensing rules and procedures, and the licensing fees shall not exceed Ten Thousand Pounds (LE.10,000).

The Authority Board of Directors shall establish the Licensing Format and Registry Data. 

The Chairman of Authority may suspend any of the activities, which are governed by the provisions of this law, if they are carried out without a license. Such a decision may include the closure of the place through administrative measures, at which such activities are carried out.

Article  (29)  

For licensing purposes, and in accordance with the preceding article, the following conditions are to be met:

1.	The application should be made by joint‑stock, or partnership limited by company shares.  

2.	Such companies are established for one or more of the purposes described in article 27 of this law.

3.	The issued capital of the company and its paid‑up capital at incorporation shall not be less than the minimum amount specified by the Executive Regulations and subject to the type and purpose of the company.

4.	Managers of such companies should have the experience and the technical qualifications required to conduct the business as specified by The Authority Board of Directors in this respect;

5.	Payment of an insurance amount to be specified by the Authority Board of Director, including the rules and procedures governing its use, replenishment, deduction there from the management of its proceeds and the reimbursement thereof.

6.	Any of the founders, managers, and board members of the company should not have been convicted, during the past five years prior to the license request, in any misdemeanor or felony related to honor or integrity, or in any of the crimes specified by the provisions of company and commercial laws, and in adjudication of bankruptcy, unless such a person has been rehabilitated.

Article  (30)

Activities of the company may be suspended in case of violating the provisions of this Law, its Executive Regulations, and the executive decisions of The Board of Authority in implementation of the law, and in case the company loses any of the license conditions and does not remove the causes of such violation after being notified, or fulfilling all licensing conditions within the time limit and terms, defined by the Chairman of the Authority.

A relevant decree should be issued by the Chairman of the Authority, specifying the reasons of suspension, limiting the suspension to a period not to exceed thirty days, and specifying the measures to be taken during the suspension period. The company shall be notified in writing of such a decision either by hand or by registered mail with an acknowledge receipt. The decision shall also be published in two daily and widely circulated newspapers at the expense of the company.

If the company does not remove such causes within the time limit indicated, the Chairman shall submit the case to the Authority's Board for the revocation of the company's license.

Article  (31)

The Authority's Board of Directors may take any of the following measures in case of an emerging danger affecting the stability of the securities market, or the company's shareholders interest, or the interest of the people who are dealing with such a company:

•	Give an admonition to the company.

•	Prevent the company from performing part or all of its licensed activities.  

•	The company's chairman is called upon to convene a board meeting at the premises of the Authority to look into the violations made by the company of law, and to take necessary measures to remove it. One or more officials representing the Authority should attend the meeting.

•	Appointing an observer on the board of the company for a period to be specified by the Authority's Board, and he shall take part in the discussions of the board and record his opinion on the decisions taken.

•	Dissolve the board of the company and appoint commissioner to manage the company temporarily until a new board is appointed in accordance with the governing laws in this respect.

•	Obligate the infringing company to increase the amount of insurance paid.

Article  (32)

Contesting the decisions stipulated in the previous articles, should be made to the contesting committee which is established by chapter five of this Law, within 15 days from the date of notifying the concerned party.

An appeal to cancel such decisions cannot be considered before contesting these decisions along the lines of preceding article.	

Article  (33)

No company is allowed to discontinue its activities or suspend its operations without prior approval from the Authority's Board which shall insure that the company has cleared its liabilities vis-à-vis others, and in accordance with the rules and procedures stipulated by the Board.

Article  (34)

Every person who carries out any of the activities specified in article (27) at the date of enactment of this Law should comply with the provisions of the Law and its executive decisions within six months from the date of promulgating The Executive Regulations.

The Authority’s Board of Directors may extend this period for another six months.

Section Two

Investment Funds

Article  (35)

	Investment Funds could be established with the aim of investing the savings in securities, within the limits and in accordance with the rules stipulated by the Executive Regulations.

	The Authority Board may license the Investment Fund to invest in other forms of movable capital, or other investment avenues, in accordance with the rules and conditions stipulated by the Executive Regulations.

	The Investment Fund should be incorporated as a joint‑stock company, the capital of which should paid in cash. The majority of the Fund's board members should not be from its investors, or from those who are affiliated to the Fund, or those who are associated with it, or beneficiaries of such Fund.	

	The Fund should contract the management of its activities to a specialized entity, in accordance with the rules set by the Executive Regulations.

Article  (36)

	The statute of the Investment Fund should specify the ratio between its paid‑in capital and the investor’s subscription, which shall not exceed the ratio specified by the Executive Regulations.
	
	The Fund shall issue securities in the form of Investment Certificates, holders of which shall be sharing the Fund's investment returns.

	Subscription in these certificates shall be made through one of the banks to be authorized by the Minister for this purpose.

	The Board of the Authority shall specify the procedures of issuing these certificates, redemption of their value, the data it should contain therein, and the rules governing its listing and trading on the stock exchange.

Article  (37)

	The Fund, when offering Investment Certificates for public subscription, should provide a prospectus including the following additional information:

•	The investment policies. 

•	The dividends distribution manner and how the capital gains are being dealt with.

•	Name and business history of the entity proposed to manage the Fund's   investment.

•	Method of periodical valuation of the Fund's assets and the procedure of redeeming the investment certificates.

Article  (38)

	All the securities held by the Fund shall be deposited in one of the banks that are under the supervision of the Central Bank of Egypt. Such a custodian bank shall not own or hold shares in the company of the Fund, or the company that is managing its investments. The Fund shall provide the Authority with a statement identifying such securities, on the Form prepared by the Authority's Board, and verified by the custodian bank.

Article  (39)

	The Chairman of the Authority should be notified of the decisions of appointing the board members and the directors of the Fund, together with all other related information within thirty days from the date of taking such decisions. The notification should be made on the relevant format prepared by the Authority. 

	The Authority's Board, in order to protect the Fund's investors, may decide to exclude any of the Fund's board members, or its directors by way of a decree specifying the reasons of such an action.

	Concerned parties may contest such a decision to the contesting committee specified in chapter five of this law, within 60 days from the date of notifying them of the decision.

Article  (40)

	The Fund shall be audited by two auditors who shall be chosen from those registered in a special registry maintained by the Authority, and prepared in consultation between the Authority and the Central Auditing Organization. A single auditor cannot audit more than two Funds at the same time. The provisions of Article 6 of this law shall govern the Investment Fund even if it is not offering its securities for public subscription.

Article  (41)

	Banks and Insurance Companies, after being licensed by the Authority, and in agreement with the Central Bank and the Egyptian Authority for Insurance Control, as the case may be, may carry out the activities of Investment Funds. The Executive Regulations shall stipulate the licensing procedures and the rules and terms governing the conduct of such business as well as its supervision by the Authority.