Mohamed Omran, president of the Financial Regulatory Authority (FRA), issued a decision authorizing charitable investment funds to invest without a maximum limit.
However, any charitable fund will set aside an amount equivalent to 2% of its total volume, with a maximum of EGP 5 million, to ensure the continuation of its activities.
This step would encourage the launch of more charitable investment funds and facilitate their work, Omran said. These funds play an important role in the support and development of social and charitable fields by injecting their returns on investment and profits, exclusively, into the activities of registered NGOs or similar public institutions.
This was the case with the National Investment Charity Education Fund, with net assets of EGP 183 million, and the ATAA Charitable Investment Fund (ACIF) to support people with disabilities, with net assets of EGP 252 million. ‘EGP.
This decision, however, does not set a maximum limit on the size of the fund, prompting many founders to launch charitable investment funds without being forced to increase the amount set aside when the fund size reaches its peak. maximum limit.
Omran noted that this step is reinforced by the fact that none of the subscription holders, including the founders, receive any returns as a result of investing in the fund, as the returns are targeted for charitable purposes or social.
Meanwhile, the International Organization of Securities Commissions (IOSCO) does not require fund founders to set aside such an amount. It only presented methods for dealing with liquidity risks, which are the responsibility of the fund’s investment manager, in accordance with the provisions of the capital markets law.
On the other hand, the FRA decision stated that investment funds of banks and companies that conduct non-bank financial activities, alone or with others, are not required to prepare annual financial statements of income. . Only financial statements need to be prepared (annual and semi-annual) since investment funds disclose the investment value (which represents the financial position of the fund) on a daily or weekly basis, in accordance with the requirements of the fund prospectus. In addition, back office companies are expected to prepare annual or semi-annual financial statements for investment funds starting in fiscal year 2021/22.