The regional real estate, construction and hospitality sectors have been turned upside down over the last two years, with Covid-19 bringing these sectors to a halt. The impact of the pandemic remains, however, the resurrection of these vital sectors across the region is a welcome relief because they support the development of modern cities, which in turn have attracted commerce and tourism to the Middle East and North Africa.
This latest edition of Law Update, provides vital insights, updates and commentary on the latest trends taking shape across the real estate, construction, hotels and leisure sectors. The articles within this edition cover a broad range of topics, from what’s next for real estate in Dubai, to commentary on Saudi real estate, a market that is set to become the main bedrock of the region for years ahead. You will find articles on reforming real estate laws in Qatar, foreign investment and ownership in Oman, and mitigating risks on hotel construction projects and the lessons learnt from Covid.Read the full report
On the 8th of February 2020, Law no. 5 of 2022 Regulating and Developing the Use of Financial Technology in Non-Banking Financial Activities (the “FinTech Law” or “Law”) was issued.
The Law aims to introduce the long awaited rules governing the provision of non-banking financial services (“NBFS”) through technology mediums which aligns with the government’s financial inclusion initiatives and its aim to foster the transition to a cashless society.
Entities operating in the NBFS sector using financial technology will fall under the auspices of the Law; the aforementioned excludes companies regulated by the Banking Law no.194 of 2020 which has been recently issued.
The FinTech Law mandates the Financial Regulatory Authority (“FRA”) to act as the competent regulator to license and oversee the use of financial technology in the NBFS.
The FRA shall issue the executive decisions of the FinTech Law within a maximum period of six months.
Entities that fall under the scope of the Law shall have a grace period of six months upon the issuance of the said executive decisions to comply and reconcile. However, such period may be extended to a maximum period of two years by virtue of FRA board’s decision.
The Law addresses the following types of companies:
The Law defines “financial technology” as “Any mechanism that utilizes modern and innovative technology in the non-banking financial sector to support and facilitate financial services, financing and insurance activities using applications, software, digital platforms, artificial intelligence, or electronic records”.
Under the FinTech Law, the FRA may issue a temporary Fintech start-up license to newly established start-ups operating in the field of NBFS related activities using financial technology.
The aforementioned fintech start-up license shall be valid for a maximum period of two years. Furthermore, to support star-ups engaging in the fintech arena, the Law provides for a lessened capital requirement for fintech start-ups, being not be less than EGP 250,000 as well as uplifts the EGP 50,000 license fee.
The Law provides for the incorporation procedures and the required documents to undertake fintech based NBFS activities. A committee shall review the incorporation request from a technical and legal aspects to advise within a maximum period of 30 days on the eligibility of the company’s incorporation. Failing to issue a decision by the said committee within the designated 30 days, shall be considered an implicit refusal to incorporate the applying entity.
The Law highlights the main 3 licensing requirements of companies operating in the field of NBFS using financial technology. Such requirements pertain, in particular, to: (1) determining direct and indirect shareholding structure as well as related parties of the applicant, (2) the required technological infrastructure, facilities, information technology, and other security means are availed by the applicant, (3) the company’s activity being limited to those specified in the license issued by the FRA. However, the FRA shall issue further regulations addressing such additional requirements pertaining to shareholding structure, board of directors’ composition as well as conflict of interest regulations.
The Law allows the entities undertaking NBFS related activities using financial technologies to use any new application, system, or platform, approved by the FRA’s board of directors. However, such entities may use any of the already existing applications and platforms which are as follows:
Notwithstanding the provisions of the Egyptian Personal Data Protection Law No.151 of 2020, the Law obliges the entities subject to the FinTech Law and any related party to protect and preserve the strict confidentiality of their clients’ personal data.
Notwithstanding the provisions of the Egyptian Penal code, the Law provides for penalties for each of the below crimes:
Should you wish to learn more about the newly promulgated FinTech Law, please contact Ayman Sherif Nour, Partner, Head of Corporate Structuring, Egypt Office and/or Ehab Taha, Partner, Head of Corporate Commercial, Egypt Office.