On the 20th of June 2021, the Financial Regulation Authority ("FRA") issued resolution no. 105 of 2021, regulating guarantees provided by the clients/agents of entities working in the field of non-banking financial activities. This resolution became effective the day following the date of its publication in the Egyptian Gazette.
The new resolution introduces several obligations to be imposed on the entities licensed by FRA to conduct non-banking financial activities, in addition to highlighting the necessity of abiding by such obligations, since they are a requirement for the continued issuance of the license to practice these activities.
Notable points of the resolution are:
- Obligating entities which fall under the scope of this resolution to grant funding to their clients/agents for the purpose requested, in accordance with the provisions of the laws regulating such activities, each according to its type;
- Obligating such entities to provide all of the data included in the contracts concluded between the entities and their clients/agents, including their attachments and associated guarantees, and not to leave any requested data unfulfilled.
- Prohibiting the obtainment of trust receipts from clients and their guarantors, as well as accepting blank signed documents as a guarantee for financing, while maintaining the guarantees provided to these entities by their clients, and delivering them to the clients immediately upon the completion of their transactions.
Through these controls, the resolution aims to balance the rights of the non-banking financial markets, and promulgate rules and regulations that guarantee the efficiency of these marketsand transparency of their activities, ultimately leading to less manipulation and fraud within these fields.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
