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Sunday, 21 August 2016

Amendments to the Capital Markets Act, insurance sector legislation, Movable Assets Act in the works

Amendments to the Capital Markets Law that “aim to protect minority rights” through limitations on market shares of brokerage houses that share a corporate parent will be sent to cabinet this week for approval before being tabled in the House, said Investment Minister Dalia Khorshid, according to Al Ahram. The changes will force will force the regulator to take market share into consideration when reviewing mergers and acquisitions and in reviewing transactions that would result in changes in shareholder structure. The amendments had received preliminary approval of the cabinet and had been sent to the Egyptian Council of State (Maglis El Dowla) for review back in May.

Other amendments to the Capital Markets Law include regulations governing the types of contracts on the upcoming futures market and risk management of futures contracts. Further amendments will regulate sukuks, Khorshid said without providing specifics. The Capital Markets Law will also be amended to ensure the independence of the Egyptian Financial Supervisory Authority (EFSA). Khorshid and EFSA chief Sherif Samy discussed the changes yesterday.

According to an emailed statement, Health insurance will be regulated under the Insurance Supervision Act under proposed changes. Other changes being pushed by EFSA center on takaful insurance and insurance for SMEs, said Samy. Changes will also set corporate governance requirements for the insurance industry and outline new requirements for professionals working in the sector, Samy added. The legislation would officially wind-down the Egyptian Insurance Supervisory Authority, making EFSA as the sole entity charged with regulating the industry. EFSA also plans to introduce clauses on insurance related-disputes in the Economic Courts Act.

Upcoming financial markets regulations also include the executive regulations of the Movable Assets Act, which Samy had initially promised would come in June. The legislation will help provide SMEs with access to funding by allowing them to collateralize assets such as equipment, inventory and crops. The regulations will establish a database for these assets, said Khorshid, who did not elaborate further.

On a related note, Samy plans to put changes to the Insurance Supervision Act and the upcoming Leasing and Factoring Act to a “national dialogue” in November, the chief financial regulator tells Al Mal. This will likely mean that Parliament will be consulted on these changes ahead of a vote, which we can safely assume will not come before November.

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