The Financial Regulatory Authority (FRA) has released a regulation governing the granting or renewal of licences of non-banking financial companies (NBFCs) including insurers.
According to the regulation, the approval process of applications for licences shall take into account the market needs for the operations for which a licence is requested, the introduction of new products or the development of existing products. The approval process will also take into other requirements that must be adhered to in accordance with the legislation regulating each activity, and take into account the effects of market concentration or degree of competition in the market.
Insurance sector
Regarding the shareholder structure of companies operating in the insurance sector, insurance companies (life and non-life) are required to have a shareholding owned by financial institutions of no less than 25% of the capital, with ownership rights of no less than EGP5bn ($103m) and classified by one of the international credit rating agencies.
For insurance/reinsurance brokerage companies, microinsurance companies, and specialised health insurance companies, financial institutions must hold a minimum of 25% of the shares of these companies.
Companies that are to engage in risk assessment, inspection and damage assessment, insurance consulting, and health management companies, do not need to have a financial institution or qualified investor as a shareholder.
Other requirements
A company wishing to obtain a licence has to submit a technical and economic feasibility study for the business according to the format approved by the FRA.
A financial institution’s contribution to the share capital of the proposed NBFC may not be less than 25% of the company’s capital, nor may the qualified investor’s contribution, directly or indirectly, be less than two-thirds of the company’s capital, taking into account the ownership structure requirements specified for certain non-banking financial activities.
The applicant must also disclose the ultimate shareholder or beneficiaries of stakes held.
It is required that at least a quarter of the members of the board of directors of insurance companies have experience in the field of insurance. The experience requirements do not apply to companies that provide professional consultations.
It is also necessary to ensure that none of the company’s founders, major shareholders, ultimate beneficiaries, or board members are included in the negative lists related to local or international sanctions and that none of the company’s board members have been issued any final judgments against them during the five years preceding their board appointment for a felony or a misdemeanor in a crime affecting honour or honesty or any of the crimes stipulated in the laws regulating non-Egyptian financial activities unless their reputation has been restored, or have been accused of committing serious violations of the laws regulating their activity during the last three years unless they have been acquitted.
The proportion of women’s representation on the company’s board of directors should not be less than 25%.
The company wishing to obtain a licence must fulfill all licensing requirements within a period not exceeding three months from the date of registration in the commercial register. In addition, the company’s establishment procedures must be completed within a period not exceeding six months from the date of the Authority’s initial approval. The two periods may be extended based on justifications acceptable to the FRA.