The Prime Minister approves the amendment of some provisions of the executive regulations of the capital market law

Amending the provisions of the executive regulations of the Capital Market Law No. 95 of 1992, which included the articles regulating the work of investment funds, as well as the development of new articles to regulate the issuance of sustainable development bonds, in order to further facilitate the work of investment funds and support the efforts of the state in achieving sustainable development goals. For his part, Dr. Mohamed Farid, Chairman of the Financial Supervisory Authority, said that the Prime Minister’s Decision No. (3456) of 2022 amending some provisions of the executive regulations of the Capital Market Law published in the Official Gazette No. 38 bis (A), included the development of new types of bonds. , she; Sustainable development bonds, sustainable development related bonds, social dimension bonds, women empowerment bonds, climate bonds, and (transitional) brown bonds.Dr. Farid continued that given the importance of debt instruments in the financial markets and the reliance of entities and companies on them as one of the important financing mechanisms for the development and development of their businesses, the idea came towards offering new financing tools to meet the challenges of climate change, shift towards a green economy, environmentally friendly projects and empowering women.Dr. “Farid” explained that the new amendments will significantly affect the investment environment by directing investors’ minds to the importance of taking into account the social and environmental aspects in their projects, in a way that works to rearrange investment priorities by increasing projects with a positive social and environmental impact, as well as its role in attracting foreign investment to the markets. In light of the international trend to issue these bonds, many investors who enjoy responsibility and awareness are looking forward to going beyond just investing their capital to achieve a material return on their money.He pointed out that many investment institutions strive to strike a balance between achieving their financial goals and environmental and societal values, which is the so-called “sustainable investment”, which is a form of investment discipline that takes into account environmental, social and corporate governance standards, which leads to a positive impact in society. or the environment or the economy as a whole.The head of the authority pointed out that these amendments come as part of the state’s efforts to localize sustainable development and contribute to achieving the desired progress in implementing the UN sustainable development goals in a way that helps achieve the goals of Egypt’s Vision 2030, by using the proceeds of the mentioned bonds to finance projects of policies and initiatives related to the sustainable development goals; This effectively helps in strengthening basic infrastructure such as drinking water, sanitation, electricity and energy and enhancing basic services such as education, vocational training and health care, leading to the expansion of social protection programs and safety nets, in addition to providing financing that targets projects, initiatives or policies that support the cause Empowering women and promoting gender equality, as well as the role of climate and infrastructure bonds in financing environmentally friendly projects.The Chairman of the Authority also indicated that the aforementioned bonds come as a continuation of the Authority’s tireless efforts to complete the development of non-bank financing tools that support efforts to achieve the sustainable development goals, as green bonds were previously introduced under the amendments made to the executive regulations of the Capital Market Law in 2018.Dr. Farid also stressed the importance of the Prime Minister’s decision to amend the executive regulations of the capital market law at this time, as Egypt prepares to host the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change “COP Conference of the Parties 27” on behalf of the African continent. Given that the issuance of the legislation means the issuance of bonds that allocate their proceeds to finance environmentally friendly projects in order to reduce emissions and mitigate the effects of climate change and global warming, and to finance those who wish to transfer and develop their activities to have less impact on the environment, it is a strong signal to the international community that Egypt is adopting steps on the ground. In order to pay attention to the climate issue in a way that enhances Egypt’s position at the international level in this file.On the other hand, the Chairman of the Authority revealed that the amendments to the executive regulations of the Capital Market Law also included making some facilities in the work of investment funds to activate their performance, as it was stipulated that the minimum capital of the investment fund company be (2%) of its size and a maximum Five million Egyptian pounds or its equivalent in foreign currencies, with the option given to the fund to increase its capital beyond the mentioned five million pounds if it so desires, leading to the possibility of increasing the size of the fund without being restricted to increasing its capital if this capital amounts to five million pounds Which gives great flexibility in the work of investment funds and removes what was hindering them from continuing their activities easily and smoothly.In light of the rules that were in place before the amendment, it was stipulated that the value of the investment documents issued by the fund should not exceed fifty times the capital, which required every time the fund wanted to issue documents that exceeded fifty times its capital, to increase the capital in order to accommodate the investment documents. to be issued. The amendments also included assigning the task of preparing the financial statements of the investment fund company to the management services company instead of the investment manager, given that this is consistent with the nature of the work of the management services company as it is responsible for evaluating the net assets of the fund and preparing a daily statement of the number of existing documents to be disclosed on a daily or weekly basis In accordance with the requirements of the fund’s prospectus.Stressing that, in order to facilitate investment funds, the amendments to the executive regulations of the Capital Market Law obligated investment funds to prepare semi-annual reports on their performance and results of their work, including data that disclose the financial position of the fund completely and correctly based on the financial statements prepared in this regard, instead of what is It was stipulated in this framework that those reports be on a quarterly basis.