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MCDR: Misr for Central Clearing

MCDR

Misr for Central Cleaning, Depository and Registration (MCDR)

Misr for Central Clearing, Depository and Registry (MCDR) was established according to the provisions of the Capital Market law number #95 of 1992 and was founded by 1- Cairo and Alexandria Stock Exchanges: with 35%, 2- Banks: with 50%,and Brokerage firms: with 15%

MCDR was established within the framework of the programs adopted by the Capital Market Authority (CMA) for developing the capital market mechanisms and applying the central depository system. The main purpose of establishing the company is to perform the activity of clearing and settlement of transactions that take place on securities on the stock exchange and applying the central tenure system for securities. The company is responsible for completing the transfers of ownership for the transactions of sale and purchase that take place on the stock exchange, and also the transfer of the ownership of securities that is made on the basis of the principle of Delivery Versus Payment (DVP).

Later on the 18th of May, 2000, the Central Depository & Registry Law was issued to regulate MCDR activities, establish the relevant legal framework to help MCDR become a self regulatory organization.

The company (MCDR) is mainly responsible for the following:

 • Undertaking clearing and settlement transactions for securities traded on the stock market and the other related services.

•  Applying the Central Depository System in Egypt.

 • Establishing the central registry system.

•  Executing corporate actions on behalf of issuers.

•  Executing pledging operations on the securities registered at the Central Depository System.

•  Managing a fund to guarantee settlement of financial and securities transactions.

•  Managing a securities lending fund.

•  Other supporting  services

•  Act as an interface for Arab and Foreign intermediaries in Egypt.

•  Act as a custodian for some financial institutions.

•  Train employees in the market on the newly introduced systems.

Read more about: The Financial Regulatory Authority (FRA)

THE NEW INVESTMENTS FRAMEWORK

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The Financial Regulatory Authority (FRA)

The Financial Regulatory Authority

The Financial Regulatory Authority is an Egyptian Governmental Authority that is an integrated agency on its own. It was established in accordance with Law no. 10 of 2009 that was issued on Feb 25, 2009 to replace all of: the Egyptian Insurance Supervisory Authority (EISA), the Capital Market Authority (CMA), and the Mortgage Finance Authority (MFA). And then it became operationally effective on July 1, 2009.

Mainly, it plays a vital role in ensuring stability and solidity for every non-banking financial market. It is responsible of their controlling, supervision and regulation. These markets includes the Capital Market that we have previously talked about in an earlier post besides other transactions; such as Future Exchanges, Derivative Markets on financial assets, Commodities Insurance Activities, Mortgage Finance, Financial Leasing, Factoring, and Securitization. FRA also works on reducing risks resulting from the lack of coordination, in addition to addressing problems emanating from the presence of different regulatory methods.

The authority’s prime goal for is to maintain the development, stability and soundness of the non-banking financial markets while protecting the rights of stakeholders, investors & participants and issuing various means, systems, and rules that ensures efficiency and transparency of these markets.

The Financial Regulatory Authority is also responsible for licensing and inspecting entities operating in non-banking financial activities, regulating the dissemination of information related to non-banking financial markets while ensuring transparency and competitiveness of non-banking financial services through applying sound rules and regulations and taking necessary actions to curb market manipulation and fraud. This is in addition to the roles and terms of references mentioned in each of: the Supervision and Regulation of Insurance Law no. 10 of 1981, the Capital Market Law no. 95 of 1992, the Depository and Central registry Law no. 93 of 2000, the Mortgage Finance Law no. 148 of 2001, Microfinance Law no. 141 of 2014, and Financial Leasing and Factoring Law no. 176 of 2018.

For more info about investment: INVESTMENT REGIMES IN EGYPT

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THE NEW INVESTMENTS FRAMEWORK

THE NEW INVESTMENTS FRAMEWORK

Investments Incentives

1.1 General Incentives

All investments projects (other than free zone projects) benefit from General Incentives under the New Investment Law. These incentives include a fixed 2% customs fee on all imported machinery and equipment, an exemption from stamp tax and registration fees on all incorporation contracts as well as finance and mortgage contracts for 5 years from registration in the Commercial Register.

1.2 Special Incentives

  1. Sector A Projects: Investments projects executed in the underdeveloped geographical areas specified in the Investments Map benefit from a deduction from the taxable net profits, at the rate of 50% calculated on the investment costs of the project.
  2. Sector B Projects: Certain types of investments projects benefit from a deduction from the taxable net profits, at the rate of 30% calculated on the investment costs.

To enjoy the Special Incentives the conditions include incorporating a new project company for the investment project within 3 years from the effective date of the Executive Regulations of the Law 72 of 2017, extendable for one year only, and holding of regular and proper books of account.

The foregoing tax incentives shall not in any case exceed 80% of the paid-up capital of the company. However, it is not applied for more than 7 years from the date of commencement of the activity of the project.

1.3 Additional Incentives

Upon a Cabinet’s decree, investment projects may be provided the following incentives:

  1. Allowing the project to establish special custom ports for its own imports and exports.
  2. The state may, after the commencement of the project, refund the investor with all or part of the expenses borne by him to extend the infrastructure facilities to the project.
  3. The state may partially finance the costs of the employee’s technical training.
  4. Refunding half the value of the land designated to industrial projects, in case of commencement of the production within 2 years from the date of handing over such land.
  5. Allocating free lands for strategic industries.

2. Investor Services Center (ISC)

As an exception to all other laws, the representatives of all licensing authorities in the ISC are subject to GAFI supervision and have all the powers to address all administrative and legal matters, allocate lands and issue all licenses to the project company for the life of the investment project.

Fixing time limits for the ISC to issue licenses: decisions must be taken within a maximum of 60 days from submission of application. In case of no reply within such period, this will be deemed an approval, to be issued by the CEO of GAFI.

3. Accreditation Offices

Such offices will be licensed by GAFI to review documents required for obtaining licenses for the project, its operations and expansion, to confirm compliance with technical, financial and other requirements under the relevant laws.

The Accreditation Office certificate is an official certificate valid for 1 year and is recognized by ISC and GAFI. Such certificate is deemed final if no justified objection is made within 10 business days from the date of submission. Hence, the investors may obtain their licenses and approvals immediately thereafter.

4. The One-Approval Businesses

Upon the Cabinet’s Decree, corporates established to carry out national or strategic projects contributing to the development process or “Public-Private Partnerships” (PPPs) in specific fields may be provided one approval. Such approval is sufficient to establish, run and manage the project and it is self-enforceable without requiring any other procedures.

5. Amicable Dispute Resolution Means

Law 72 provides for ADR mechanisms that ensure efficient and fair resolution of disputes, in addition to protecting the investors. Final decisions taken are binding to the Administration, while the investor retains the right to appeal such decisions before the competent courts. The ADR mechanisms include:

  1. The Grievance Committee.
  2. The Ministerial Committee for Resolution of Investment Disputes.
  3. The Ministerial Committee for Settlement of Investment Contracts Disputes.
  4. Arbitration and Mediation Center.

For more info about investment: INVESTMENT REGIMES IN EGYPT

Investment Guarantees Foreign Investment

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Investment Guarantees Foreign Investments

Investment Guarantees

1.1 Equal and Fair Treatment for Foreign Investment

Under the New Investment Law No. 72 of 2017, all investments are now explicitly guaranteed fair and just treatment without discrimination. Moreover, foreign investors may receive preferential treatment, upon Cabinet’s approval, if the investor’s country gives Egyptian investors similar preferential treatment.

1.2 No Expropriation of Investment-Projects

Investments may not be subject to arbitrary, abusive or discriminatory decisions or procedures. Investment projects may not be administratively attached, sequestrated or frozen, except by a final court order or judgment.

Projects may not be nationalized and title to their assets may not be expropriated, except for the public good and against fair economic value payable in advance without any delay, and transferable without restrictions.

1.3 Residence of Foreign Investors in Egypt

Foreign investors are now guaranteed residency in Egypt throughout the life of the investment project.

1.4 Hiring Foreign Employees

Foreigners may now constitute up to 20% of the labor force in the project and this percentage may increase in strategic projects.

1.5 Import and Export

Investment projects may import directly or through third parties their machinery, equipment, raw materials and production requirements without need to be registered in the Importers Register; and may export their products without need to be registered in the Exporters Register.

1.6 No Arbitrary Revocation of Licenses

Governmental and regulatory authorities may not revoke the investment projects license or suspend it, and may not cancel the land allocation, except after giving notice to the investor of the breach, hearing his views and giving him adequate time to remedy the breach. Moreover, no such decision may be taken without the prior opinion of GAFI. Further, the investor retains the right to appeal such decision before the GAFI Appeals Committee and then the courts, if necessary.

1.7 Conversion and Repatriation of Profits

Investors are entitled to own, operate, expand and finance their projects in foreign currency transferred from outside Egypt through registered banks without restrictions.

Similarly, the Government shall permit foreign investors to freely dispose of their assets, liquidate their projects, convert proceeds in local currency into foreign currency through registered banks and repatriate their profits, sale proceeds and/or their capital, in foreign currency, without restrictions or delays.

for more info about investment check: INVESTMENT REGIMES IN EGYPT

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INVESTMENT REGIMES IN EGYPT

investment

1. Inland Investment

Inland investment is governed by the Investment Incentives and Guarantees Law No. 72 of 2017 and Companies Law No. 159 of 1981 and their executive regulations. The General Authority for Investment (GAFI) acts as the official regulator for all incorporations and licenses governed by both legislations.​ Some projects require prior approval from relevant ministries in addition to GAFI. Such projects include investments in the Sinai Peninsula, all military product manufacturing and related industries, and those involving tobacco and tobacco products.

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2. Free Zones

Free Zones are one of the distinguished investment patterns where you can establish, set up and start your own project under the umbrella of this system according to the provisions Investment Law No. 72 of 2017and its executive regulations. This system is applied by General Authority for Investment and Free zones (GAFI). A free zone is a part of the state land that exists within its political boundaries and subjected to its administrative authority. The treatment aspects that are related to goods movement, either in and out, in relation to customs, import, monetary system and other aspects of dealing differs from the procedures applied inside the country with regard to the similar transactions.

In Egypt, there exist Alexandria Public Free Zone, Nasr City Public Free Zone, Port Said Public Free Zone, Suez Public Free Zone, Ismailia Public Free Zone, Damietta Public Free Zone, Media Public Free Zone, Shebin El- Kom Public Free Zone, Qeft Public Free Zone and Port Said East Port Public Free Zone.

3. Investment Zones

Subject to a decree issued by the Prime Minister, investment zones specialized in various investment fields may be established, including logistic, agricultural, and industrial zones. The decision incorporating the zone shall state the location and coordinates of the zone, the nature of activities to be practiced therein, the term for completing the procedures required for the establishment of the zone, and any general conditions related to conducting such activities.

Currently, there are (13) investment zones specialized in various fields and distributed among (7) Egyptian governorates.

4. Special Economic Zones

SEZONE is the first economic zone with a special nature to be established in Egypt by the law No. 83 of 2002. The SEZONE will develop an international recognition and reputation for being a competitive business location that provides Egyptian and foreign investors with top-class infrastructure, market access, and streamlined administrative procedures.

The development of SEZONE is intended to provide an attractive environment for medium and light industries as well as logistics services, thus enhancing economic activity in the region and creating new employment opportunities.

Location: SEZONE is located in the Suez Governorate in the Sokhna area and adjacent to the Sokhna Port near the southern entrance to the Suez Canal. The land area earmarked for the SEZONE 1st phase is approximately 20.4 km2.

5. Technological Zones

Upon a proposal by the GAFI’s Board of Directors and a request of the Minister of Communications and Information Technology, the Prime Minister may license the establishment of Technological Zones in the field of communications and information technology, including industrial activities, design and development of electronics, data centers, outsourcing activities, software development, technological education, and other associated or complementing activities.

6. Investment Industrial Zones

Qualifying Industrial Zones in Egypt are located in the Greater Cairo Zone, the Alexandria Zone, the Suez Canal Zone, the Central Delta region and Upper Egypt. These five regions cover multiple districts and governorates including:

  1. Greater Cairo Zone: Giza, Shoubra El Kheima, Nasr City, Tenth of Ramadan City, Fifteenth of May City, Badr City , Sixth of October City, El Obour City , Kalioub City and the industrial area in Gesr El Suez.
  2. Alexandria Zone: Borg El Arab and Dakahleyya governorate.
  3. Suez Canal Zone: Port Said, Ismailia and Suez.
  4. Central Delta region: Gharbeyya, Monofeya, and Damietta governorates.
  5. Upper Egypt: Minya and Beni Suef governorates.

As of February 2017, there were 961 registered QIZ companies, out of which the vast majority 765 companies (79.6%) produce textiles and clothing items. Of these, 196 produce ready-made garments. As the U.S. tariffs on textile and apparel goods are relatively high, production of these goods in QIZs is particularly attractive. In addition, 70 companies (7.3%) operate in the processed agricultural products sector. Alexandria has the highest concentration of companies, hosting 235 companies (24.5%), while Tenth of Ramadan has the next highest concentration with 166 companies.

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