Egypt’s Financial Regulatory Authority (FRA) has amended the requirements for real estate investment and development companies seeking to convert into real estate investment fund companies.
Under the new rules, a company’s net equity must be at least EGP 500M based on its latest approved financial statements. The amendment removes the previous requirement that net equity represent at least 40% of total assets and investments, subject to the same EGP 500M minimum.
Net equity will be calculated after excluding differences resulting from asset revaluations. After conversion, the remaining equity will be used to subscribe to the fund’s investment certificates.
The amended rules also require loans recorded in the company’s latest approved financial statements to remain within the borrowing limit permitted for real estate investment funds. Under the Capital Market Law’s executive regulations, that limit is currently 60% of the net value of the fund’s investment certificates, although the FRA board can amend the ratio.
The decision retains the requirement for issued and paid-up capital of at least EGP 5M, or its equivalent in foreign currencies.
According to FRA Chairman Islam Azzam, the changes reflect practical experience with real estate developers’ operating cycles, project delivery obligations and customer advance payments.
Source: Zawya
