Establishing Mortgage Finance Companies

Steps needed to establish a Mortgage Finance Company as described in Section 5, articles # 27 to article # 37

of the Executive Regulations for Mortgage Law # 148, the year 2001

Article : 27

A company licensed to exercise the real estate finance activity shall take the form of an Egyptian joint stock company (S.A.E), have an issued capital of not less than fifty million Egyptian pounds and the amount paid up there of on its foundation shall not be less than the fourth. The rest of the capital shall be fulfilled within a period not exceeding one year from the date of recording the company in the Register of Commerce.

Article : 28

The license application shall be submitted on the 'Form' to be prepared by the Authority for the purpose, providing the following shall be attached thereto:

Heads of agreement and articles of association of the Company.
Commercial register of the company.
Statement of qualifications and experiences of the Company's directors and branch managers.
Declaration by the Company's founders and directors that no judgment in bankruptcy was passed against any of them during the previous five years, or a certificate of his discharge in bankruptcy.
Declaration by the Company's founders, manager, and board of members that no sentence was passed against any of them during the five previous years imposing a felony or misdemeanor penalty in an offense involving moral turpitude or trust, or a certificate of his rehabilitation.
Certificate from two auditors whose name are registered with the Authority declaring their acceptance of auditing the company's accounts.
The receipt in evidence of having settled the license application fees

Article : 29

The license fees shall be five thousand pounds for the companies with the capital not exceeding fifty million pounds, and ten thousand pounds for companies with a capital exceeding that limit.

Article : 30

Granting the license shall be conditional upon the following:

Fulfilling the documents referred to in article (28).
The executive director of the company shall fulfill, in any of the banking or finance work fields, an experience of not less than ten years after obtaining a high qualification in that field.
The finance, legal, and engineering directors and the branch managers shall fulfill, in any of the banking, finance, or legal work fields, a practical experience of not less than ten years after obtaining a high educational qualification.

Article : 31

The authority shall give the license applicant a certificate of having received the application and the documents attached to it, and charge him – by virtue of a statement of particulars to be handed thereto within ten days from the date of submitting the application – to fulfill the documents that might be necessary within three months following that commissioned required, otherwise his application shall lapse.

The authority shall issue its final decision in the license application and notify the applicant of its decision therein by virtue of a registered letter with acknowledgment of receipt, within thirty days from the date of fulfilling the documents.

Article : 32

The license shall be issued by a decision of the Authority's board of directors. The license shall not be refused except by virtue of a substantiated decision and in the cases prescribed in article (31) of the law.

Article : 33

The companies to be licensed for exercise of the real estate finance activity shall be recorded in a register provided for the purpose by the Authority for recording the public judicial persons and companies. The entry recorded therein shall comprise the data of each company, its capital, the addresses of its branches, and the names of its board members, directors, and auditors.

Article : 34

The licensed company shall submit to the Authority its financial statements during approved by auditors, within one month from the end of the six months prescribed in clause-2 of article (33) of the law.

Article : 35

The licensed company shall comply with the following requirements:

The company's assets shall be valuated according to the Egyptian Accountancy standards, subject to the Egyptian Auditing standards as determined by the ministerial decrees to be issued in this respect.
The percentage of capital adequacy of the company shall not be less than ten percent of the total assets.
The percentage of the company's circulating assets shall not exceed its circulating liabilities by more than (25%).
The total loans obtained by the company shall not exceed ten times its capital.
Setting the rules necessary for ensuring the good and proper process of work, according to article (32) – clause (4) – of the Real Estate Finance Law.

Article : 36

A company willing to stop its activity, liquidate its assets or a part thereof exceeding (50%), or merge with another company operating in the same activity or in another line of activity, shall submit an application therefore to the Authority on the "Form" prepared by it for the purpose, attaching the following:

First: Discontinuing the Activity:

Statement of the reasons for discontinuation of activity.
Decision of the Board of Directors, and the Extraordinary General Assembly's resolution for discontinuation of activity, and the auditor's report in respect thereof.
Measures proposed to be taken for liquidating the company's assets and liabilities, in a way ensuring the protection of interests of the stockholders and workers of the company and its creditors.
Measures proposed for transfer of the company's rights and obligations in the real estate finance activity to other quarters licensed to exercise that activity.

Second: Liquidation of Assets:

Statement of the reasons for liquidation of all the assets or a apart thereof exceeding (50%) of their market value.
The board of directors' decision and the extraordinary general assembly's resolution for liquidation, and the auditor's report in respect thereof.
Measures proposed for transfer company's liquidated rights and obligations in the real estate finance activity according to the finance agreements, to other quarters licensed to exercise that activity.

Third: Merger of the company:

Statement of the reasons for conditions of merger.
Merger draft decision.
Decision of the Board of Directors, and the Extraordinary General Assembly's resolution for merger, and the auditors' report in respect thereof.
Preliminary estimation of the value of the merged companies' assets and liabilities, and the bases on which the estimation has been grounded.
Method of determining the stockholders' equity and obligations in the merged companies.
Measures proposed for transfer of the finance agreements to the company resulting merger and which is licensed to exercise the real estate finance activity according to the provisions of the law.

Article : 37

The Authority shall notify the applicant requesting discontinuation of the activity or liquidation of the assets or the merger, according to each case, of its approval of the application or its refusal with substantiated decision, within thirty days fro submitting the application. The refusal shall be based on serious reasons connected with considerations of stability of the finance activity or interests of the investors or stockholders, within thirty days from submitting the application.