Egypt Financial Regulatory Authority reduces lock-up on investment fund units issued for in-kind contributions to 51% and permits pledging and limited transfers

The Egypt Financial Regulatory Authority issued amendments to the rules governing subscriptions in investment fund units in exchange for in-kind contributions, reducing the mandatory retention requirement and easing exit conditions. The changes also allow investors to finance their positions by pledging the restricted units. Under Decision No. 9 of 2026, the in-kind contributor must not dispose of 51% of the fund units received for two years or until the fund disposes of the in-kind contribution, whichever is earlier, replacing the prior restriction that barred disposal of all units for two years. Transfer of the retained units during the restriction is permitted only where the buyer is a bank, insurance company, investment fund, specialised investment entity, or an experienced corporate independent of the fund manager, subject to approval by the authority and the unitholders’ assembly and provided the buyer holds the units until the end of the restriction. The decision permits pledging these units as long as the pledge does not result in their transfer during the restricted period; if the units are listed, the investment manager must notify the exchange and the central depository of the restriction. It also restates conditions for eligible in-kind contributions, including that the asset must be one the fund can invest in and not in a company under liquidation or declared bankrupt, with additional requirements for real estate (registration or an allocation decision and no judicial dispute), and requires the fund company’s board to approve presenting the in-kind contribution to the unitholders’ assembly with two-thirds attendance.