Establishment of the Fund
Establishment of the Fund
Establishment of the Fund is attributed to the legislator’s desire upon enacting the capital market law no. 95 of the year 1992, particularly article-23 thereof, which stipulates for establishing a special fund that has juridical personality to secure stakeholders against non-commercial risks arising from activities of the companies operating in the field of securities, provided that the Fund shall be established by virtue of a decree of the Prime Minister based on the proposition of the Minister and suggestion of the Authority’s board of directors, and that the decree issued for establishing the Fund shall prescribe the management system of same, the relation between it and its member companies, the rate of contribution of each member company to the resources thereof, the rules of spending and investing such resources, the risks insured by the Fund and the bases of indemnification therefor.
Accordingly, the Prime Minister issued the decree establishing the Fund by virtue of decree no. 1764 of the year 2004, which states the Fund management system, the relation between it and its member companies, the rate of contribution of each member company to the resources thereof, the rules of spending and investing such resources, the risks insured by the Fund and the bases of indemnification therefor.
In view of the development witnessed by the capital market during the aforesaid period, the rules organizing the Fund were amended by means of issuing Prime Minister’s Decree No. 1576 of the year 2014. The most significant amendment included in this decree was raising the maximum limit of indemnity from one hundred thousand pounds per each security to five hundred thousand pounds for the total client portfolio, including one hundred thousand pounds for the credit cash balance resulting from transactions.
Driven by the Financial Regulatory Authority’s concern for enhancing the local economy and motivating growth, an amendment was introduced during the year 2018 to the Capital Market Law, particularly article-23 of law no. 95 of the year 1992, by adding a means of protection for the shareholders of companies with listed securities or financial instruments on the Egyptian stock exchanges (free equity traders) besides the protection provided by the Fund to the investors dealing with the securities companies.
Based on the aforesaid amendment, the Prime Minister issued decree no. 2339 of the year 2019 on reorganizing the Fund, considering the amendments introduced by the legislator to article-23 of the Capital Market Law. Subsequently, the Financial Regulatory Authority issued the Fund’s articles of association by virtue of the Authority’s board decision no. 32 of the year 2021.
Legal Personality of the Fund: