FRA Registry for Financial Leasing

On 14 October 2018, the Egyptian Gazette published Financial Regulatory Authority (“FRA”) Decision No. 139 of 2018 (the “Decision”),[1] establishing a registry in the FRA for financial leasing contracts concluded and/or enforced in Egypt, or any amendments or annexes in relation to these contracts. The Decision also outlines the procedures and regulations to register the said contracts in the registry in accordance with the Financial Leasing and Factoring Law No. 176 of 2018.[2] It also spells out the procedures for documenting complex relationships among the lessor, the lessee, and third parties, including the lessee’s option to purchase the leased asset – prior to or after the end of the lease – which is a distinct feature that differentiates financial leasing contracts from regular leases.

Registration Process

The new Decision includes the FRA’s procedures for the registration of new financial leasing contracts as well as amendments to or the removal of already registered contracts. The documents that must be submitted along with the registration application vary depending on the type of request, but they mostly include basic records including data on the contractual parties, information on the person filing the registration application, detailed information on the subject of the financial leasing contract, and proof of the lessor’s ownership of the asset.

Practicing the Right to Purchase

Should the lessee wish to practice their right to purchase the leased asset, the purchase contract or the contract to transfer the usufruct right has to be registered in the same registry.

Amending the Financial Leasing Contract after Registration

Any amendments to registered financial leasing contracts must be reflected in the FRA registry. Either party to the contract may reserve the right to assign their contractual agreement to third parties given that they record said changes in the registry.

Terminating a Registered Contract

The FRA reserves the right to omit a financial leasing contract from its registry in the following cases:

• Non-renewal of due contracts;
• Upon the request of the parties of the contract;
• A final court or arbitration decision that rules to end the registered contract;
• Contract termination, such as in the event of the lessee’s death, bankruptcy, or their refrain from paying the due lease on time, or for other reasons stated in the contract.

Applicable Fees

The Decision sets a registration fee at 0.01% of the contract price (given that the fee cannot be less than EGP 50 or more than EGP 500), while amendments to registered contracts are for a fee of EGP 100. Should a stakeholder wish to acquire a document or a certificate that is relevant to a registered contract, a fee of EGP 50 per document is collected.   [1] FRA Board of Directors Decision No. 139/2018 on the regulations for registration in the FRA’s financial leasing registry, Egyptian Gazette, Issue No. 230, 14 October 2018. [2] Law No. 176/2018 regulating financial leasing and factoring, Official Gazette, Issue No. 32 (bis) (c), 14 August 2018.