Financial Regulatory Authority amends real estate fund conversion rules

The Financial Regulatory Authority (FRA) has issued a decision to amend the requirements for real estate development companies transitioning into real estate investment funds. The changes aim to better reflect the operational nature and contractual obligations of these companies, particularly regarding project delivery and customer advances.

Under the new rules, the requirement for net equity has been simplified. Companies must now maintain net equity of at least 500 million Egyptian pounds based on their latest approved financial statements. This replaces the previous rule, which required net equity to be at least 40% of total assets and investments, with a minimum of 500 million pounds. Net equity will be calculated after excluding differences resulting from asset revaluations.

Additionally, the decision introduces a new condition stating that recorded loans in the company’s latest approved financial statements must not exceed the maximum borrowing ratio permitted for real estate investment funds under the Capital Market Law. The requirement for issued and paid-up capital to be at least 5 million pounds remains unchanged.