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Monday, 15 April 2019

Financial Regulatory Authority issues regulations for sukuks in Egypt

REGULATION WATCH- The Financial Regulatory Authority (FRA) issued regulations governing the issuance and listing of sukuks, the market regulator said in a statement. The regulations stipulate that the shariah-compliant bond issuances be approved by a religious committee and issued through an independent body that monitors the issuance and reports violations. The issuing party and the independent body will be required to announce any material developments that impact the asset and returns. Public entities looking to issue a sukuk will have to do so through a publicly-owned sukuk company and will be monitored by the Central Auditing Agency. Shareholding companies can issue their own sukuks in the case of private placement only. Read the full regulations here (pdf).

Minimum and maximum issuance sizes: The regulations set a EGP 50 mn baseline for any sukuk issuance and stipulate that the maximum be determined based on the amount of financing needed for the specific purpose of the issuance, in accordance with the issuer’s credit rating. Issuances by international and regional institutions must be worth at least EGP 100 mn, will require central bank approval, and must have a credit rating. Sukuk will need to be backed by a prospectus.

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