The Egypt Financial Regulatory Authority has amended the controls for subscribing to investment fund units in exchange for an in-kind contribution, reducing the mandatory lock-up from 100% of the received units to 51% and linking the end of the restriction to the fund’s disposal of the contributed asset. The framework also permits limited transfers of the retained units and allows them to be pledged, subject to specified safeguards and approvals. Under Decision No. 9 of 2026, the contributor must not dispose of 51% of the units received for two years or until the fund disposes of the in-kind contribution, whichever is earlier, replacing the previous rule that prevented disposal of all units for two years from issuance. Transfer of the retained units during the restriction period is allowed where the buyer is a bank, insurance company, investment fund, specialized investment entity, or an experienced corporate investor that is independent of the fund manager and agrees to hold the units until the restriction ends, subject to approval by the Authority and the unitholders’ assembly. The retained units may also be pledged provided the pledge does not result in the units passing to anyone other than the pledgee during the restriction period; if the units are exchange-listed, the investment manager must notify the exchange and the central securities depository of the restriction. The decision also sets conditions for eligible in-kind assets, including that they must be instruments the fund can invest in and not be in a company under liquidation or declared bankrupt, with additional requirements for real estate contributions such as registration or a state allocation decision and absence of judicial dispute; it also requires the fund company’s board to approve presenting the in-kind contribution to the unitholders’ assembly with a two-thirds attendance condition.
Egypt Financial Regulatory Authority 2026-02-05
Egypt Financial Regulatory Authority amends in-kind subscription rules for investment funds by cutting retained units to 51% and easing exit and pledge options
The Egypt Financial Regulatory Authority revised rules for subscribing to investment fund units with in-kind contributions, reducing the mandatory lock-up from 100% to 51% of received units. The new framework allows limited transfers and pledging of retained units, subject to specific safeguards and approvals. Conditions for eligible in-kind assets include investment suitability and absence of legal disputes, with additional requirements for real estate contributions.