Articles of Association of the Egyptian Federation for Mortgage Finance
Mortgage finance in Egypt is governed by Law No. 148 of 2001[1], which defines mortgage finance as “a way to finance the purchase, construction, renovation, or improvement of houses, administrative units, service facilities, and buildings designated for commercial activity”. The Egyptian Financial Supervisory Authority is the competent body to supervise mortgage finance activities in Egypt; starting from the granting of licenses and permits to mortgage finance companies, drawing up general policies for mortgage finance activities, developing financial standards for companies, supervising and inspecting companies and imposing administrative sanctions on companies violating the law, combating money laundry, protecting investors and market players in the mortgage finance market, and establishing the Egyptian Federation for Mortgage Finance and setting forth its articles of association.
The Cabinet of Ministers had issued decree No. 465 of 2005
[2] amending the Executive Regulations of Law No. 148 of 2001 which in its turn has been amended by Presidential Decree No. 55 of 2014,
[3] and in 2015 its executive regulations have been amended once more by decrees No. 1 and 2 of 2015.
[4] The amended executive regulations of the mortgage finance law provide for the establishment of the Egyptian Federation for Mortgage Finance which aims at supporting and developing mortgage finance activity, and looking after the interests of its members. This federation shall have its own legal personality, and shall be responsible for uniting and coordinating among mortgage finance market players with the aim of promoting this activity in Egypt. The federation is regulated and supervised by the Egyptian Financial Supervisory Authority.
The executive regulations of the law entrusted EFSA’s Board of Directors to issue the federation’s articles of association which has been issued by the present decree No. 41 of 2015
[5]. EFSA Chairman has also issued decree No. 406 of 2015 appointing the founding committee to put the Egyptian Federation for Mortgage Finance into action
Decision No. 41 of 2015
| The Egyptian Federation for Mortgage Finance aims at developing mortgage finance and related financial professions. |
EFSA’s Board of Directors issued decision No. 41 of 2015 (the "
Decision") featuring the article of association of the Egyptian Federation for Mortgage Finance which aims at developing mortgage finance and related financial professions, issuing recommendations regarding mortgage finance regulations, commenting on related legislations, enhancing skills of market players through preparation and development programs and training courses, coordination between the federation, its members, the Central Bank of Egypt, and all other bodies and government agencies and non-governmental organizations working in the field of mortgage finance, and the furnishing, supporting and encouraging research and studies in this field.
The Decision also included the conditions for membership, the process for electing the board of directors. It further sets out the powers of federation, its authorized activities, as well as other financial, administrative and regulatory affairs. The members of the federation shall include all mortgage finance and refinance companies that are subject to the Mortgage Finance Law. The following entities may also join the federation as members: mortgage finance banks, the Mortgage Guarantee and Subsidy Fund, the New Urban Communities Authority, and the Social Housing Fund. Other entities may also join the federation such as unions and associations representing real estate agents, real estate valuation experts, and real estate brokers, as long as the number of members of those entities exceeds 25% of the total number of those registered with EFSA at the time of applying to the federation for membership. The Decision distinguished between two categories of members so as to maintain the balance at the general assembly meetings of the federation. Category (A) comprises mortgage finance and refinance companies, while the second category (B) comprises all other players. The federation shall have a board of directors of eleven members, of which ten members are elected through a cumulative voting method, counting one vote for each candidate by each federation member while taking into account the weighted votes of each member depending on the category they belong to. The Board of Directors shall include one member representing the Mortgage Guarantee and Subsidy Fund. Such member shall be nominated by the chairman of the fund. Board members shall elect the president of the federation from category A, and shall also elect a vice chairman of the Board. It is worth noting that the Founding Committee of the federation has called for the first general assembly meeting and the election of its first board of directors on June 25, 2015.
| The Federation may consider cancelling the membership of a federation member, depriving such member of a necessary license condition |
The Decision also provided for the penalties imposed on offending members of the federation including but not limited to written warnings, financial penalty with a minimum of EGP 5,000 and a maximum of EGP 20,000. The maximum shall be increased to EGP 50,000 for repeated offenses. The federation may also consider cancelling the membership of a federation member, although the membership is considered a necessary condition for the activity license.
Conclusion
The articles of association of the federation include many general provisions that are common to all articles of association. There are many positive features to this Decision; for example, that the appointment of the chairman of the board shall be from Category (A) members (i.e. from mortgage finance and refinance companies), which ensures the preservation of the interests of members, and ensures fulfilling the objectives of the federation. Additionally, a number of regulations have been put forth to avoid conflict of interest for example, the chairman is prevented from voting on decisions relating to the company he represents. The Law also stipulated as mentioned above the right of the federation to express its views on laws and draft laws regulating mortgage finance activities especially that federation members who are also market players are fully aware of this field and can hence propose effective amendments to enhance mortgage finance activities in the market.
However, considering the cancellation of membership of an offending member a reason for losing one of the activity licensing conditions, contradicts with the principle of freedom to join NGOs. And thus this article shall be reconsidered.
[1] Mortgage Finance Law No. 148/2001, Official Gazette, Issue 25 (bis), 24 June 2001.
[2] Prime Minister's Decree No. 465/2005 amending certain provisions of the Mortgage Finance Law, Official Gazette, Issue No. 64 (cont.) (a), 22 March 2005.
[3] Presidential Decree-Law No. 55/2014 amending certain provisions of the Mortgage Finance Law, Official Gazette, Issue No. 26 (bis) (h), 2 July 2014.
[4] Cabinet of Ministers' Decree No. 1/2015 amending certain provisions of the Executive Regulation for the Mortgage Finance Law, Official Gazette, Issue No. 8 (bis) (b), 23 February 2015; Cabinet of Ministers' Decree No. 2/2015 amending certain provisions of the Executive Regulation for the Mortgage Finance Law, Official Gazette, Issue No. 13(bis) (b), 1 April 2015
[5] EFSA Board of Directors' Decision No. 41/2015 adopting the Articles of Association of the Egyptian Federation for Mortgage Finance, Official Gazette, Issue No. 102, 5 May 2015.
Mortgage finance in Egypt is governed by Law No. 148 of 2001[1], which defines mortgage finance as “a way to finance the purchase, construction, renovation, or improvement of houses, administrative units, service facilities, and buildings designated for commercial activity”. The Egyptian Financial Supervisory Authority is the competent body to supervise mortgage finance activities in Egypt; starting from the granting of licenses and permits to mortgage finance companies, drawing up general policies for mortgage finance activities, developing financial standards for companies, supervising and inspecting companies and imposing administrative sanctions on companies violating the law, combating money laundry, protecting investors and market players in the mortgage finance market, and establishing the Egyptian Federation for Mortgage Finance and setting forth its articles of association.
The Cabinet of Ministers had issued decree No. 465 of 2005
[2] amending the Executive Regulations of Law No. 148 of 2001 which in its turn has been amended by Presidential Decree No. 55 of 2014,
[3] and in 2015 its executive regulations have been amended once more by decrees No. 1 and 2 of 2015.
[4] The amended executive regulations of the mortgage finance law provide for the establishment of the Egyptian Federation for Mortgage Finance which aims at supporting and developing mortgage finance activity, and looking after the interests of its members. This federation shall have its own legal personality, and shall be responsible for uniting and coordinating among mortgage finance market players with the aim of promoting this activity in Egypt. The federation is regulated and supervised by the Egyptian Financial Supervisory Authority.
The executive regulations of the law entrusted EFSA’s Board of Directors to issue the federation’s articles of association which has been issued by the present decree No. 41 of 2015
[5]. EFSA Chairman has also issued decree No. 406 of 2015 appointing the founding committee to put the Egyptian Federation for Mortgage Finance into action
Decision No. 41 of 2015
| The Egyptian Federation for Mortgage Finance aims at developing mortgage finance and related financial professions. |
EFSA’s Board of Directors issued decision No. 41 of 2015 (the "
Decision") featuring the article of association of the Egyptian Federation for Mortgage Finance which aims at developing mortgage finance and related financial professions, issuing recommendations regarding mortgage finance regulations, commenting on related legislations, enhancing skills of market players through preparation and development programs and training courses, coordination between the federation, its members, the Central Bank of Egypt, and all other bodies and government agencies and non-governmental organizations working in the field of mortgage finance, and the furnishing, supporting and encouraging research and studies in this field.
The Decision also included the conditions for membership, the process for electing the board of directors. It further sets out the powers of federation, its authorized activities, as well as other financial, administrative and regulatory affairs. The members of the federation shall include all mortgage finance and refinance companies that are subject to the Mortgage Finance Law. The following entities may also join the federation as members: mortgage finance banks, the Mortgage Guarantee and Subsidy Fund, the New Urban Communities Authority, and the Social Housing Fund. Other entities may also join the federation such as unions and associations representing real estate agents, real estate valuation experts, and real estate brokers, as long as the number of members of those entities exceeds 25% of the total number of those registered with EFSA at the time of applying to the federation for membership. The Decision distinguished between two categories of members so as to maintain the balance at the general assembly meetings of the federation. Category (A) comprises mortgage finance and refinance companies, while the second category (B) comprises all other players. The federation shall have a board of directors of eleven members, of which ten members are elected through a cumulative voting method, counting one vote for each candidate by each federation member while taking into account the weighted votes of each member depending on the category they belong to. The Board of Directors shall include one member representing the Mortgage Guarantee and Subsidy Fund. Such member shall be nominated by the chairman of the fund. Board members shall elect the president of the federation from category A, and shall also elect a vice chairman of the Board. It is worth noting that the Founding Committee of the federation has called for the first general assembly meeting and the election of its first board of directors on June 25, 2015.
| The Federation may consider cancelling the membership of a federation member, depriving such member of a necessary license condition |
The Decision also provided for the penalties imposed on offending members of the federation including but not limited to written warnings, financial penalty with a minimum of EGP 5,000 and a maximum of EGP 20,000. The maximum shall be increased to EGP 50,000 for repeated offenses. The federation may also consider cancelling the membership of a federation member, although the membership is considered a necessary condition for the activity license.
Conclusion
The articles of association of the federation include many general provisions that are common to all articles of association. There are many positive features to this Decision; for example, that the appointment of the chairman of the board shall be from Category (A) members (i.e. from mortgage finance and refinance companies), which ensures the preservation of the interests of members, and ensures fulfilling the objectives of the federation. Additionally, a number of regulations have been put forth to avoid conflict of interest for example, the chairman is prevented from voting on decisions relating to the company he represents. The Law also stipulated as mentioned above the right of the federation to express its views on laws and draft laws regulating mortgage finance activities especially that federation members who are also market players are fully aware of this field and can hence propose effective amendments to enhance mortgage finance activities in the market.
However, considering the cancellation of membership of an offending member a reason for losing one of the activity licensing conditions, contradicts with the principle of freedom to join NGOs. And thus this article shall be reconsidered.
[1] Mortgage Finance Law No. 148/2001, Official Gazette, Issue 25 (bis), 24 June 2001.
[2] Prime Minister's Decree No. 465/2005 amending certain provisions of the Mortgage Finance Law, Official Gazette, Issue No. 64 (cont.) (a), 22 March 2005.
[3] Presidential Decree-Law No. 55/2014 amending certain provisions of the Mortgage Finance Law, Official Gazette, Issue No. 26 (bis) (h), 2 July 2014.
[4] Cabinet of Ministers' Decree No. 1/2015 amending certain provisions of the Executive Regulation for the Mortgage Finance Law, Official Gazette, Issue No. 8 (bis) (b), 23 February 2015; Cabinet of Ministers' Decree No. 2/2015 amending certain provisions of the Executive Regulation for the Mortgage Finance Law, Official Gazette, Issue No. 13(bis) (b), 1 April 2015
[5] EFSA Board of Directors' Decision No. 41/2015 adopting the Articles of Association of the Egyptian Federation for Mortgage Finance, Official Gazette, Issue No. 102, 5 May 2015.