الهيئة العامة للرقابة المالية

• The Authority aims to create a comprehensive legal framework for Digital PE/VC Platforms.
• Platforms must enforce mandatory registration conditions, requiring customers to pass a knowledge test officially approved by the Authority.
• Platforms must establish permanent communication channels between the investment funds and registered users to ensure all inquiries are promptly addressed.
• Platforms are obligated to provide a required set of disclosures to facilitate the investment process for both prospective and registered users.
• Each platform must feature a digital subscription request form and all parties involved are bound by specific rules governing the subscription process.
• The regulations establish a transparent and integrated regulatory framework for the redemption of investment units, designed to boost market confidence and protect investors’ interests.

FRA Board of Directors chaired by Dr. Mohamed Farid issues Resolution No. 194 of 2025 to set comprehensive controls for establishing digital PE/VC  platforms.

Private Equity Fund is essentially a closed, direct investment vehicle that deploys capital into both listed and unlisted securities. It is specifically permitted to engage in Venture Capital (VC) activity and its units are offered for subscription, with the possibility of listing on the stock exchange. Venture Capital activity itself is defined broadly, encompassing the financing, support, and development of high potential, high-risk projects. The goal of VC is to convert these projects, often suffering from financing shortfalls and characterized by a long investment cycle, into established shareholding or limited partnership companies.

This groundbreaking regulation is central to FRA’s strategy to build a comprehensive legal framework for digital platforms. The Authority began this process by regulating Digital Real Estate Platforms, establishing a secure, transparent and effective environment there first. Following this, the Authority proceeded to regularize the status of existing  Digital Real Estate Platforms, with the goal of allowing real estate project developers to present these projects to investors through FRA-licensed digital platforms.

The regulation strictly defines a Digital PE/VC Platforms as a technology-based business model for non-banking financial activities that must be approved by FRA. This platform must facilitate the subscription or redemption of Private Equity fund units (which may conduct Venture Capital activity) and display all necessary data for these transactions. To ensure transparency and data integrity, the platform is required to provide comprehensive disclosures for investors to monitor their holdings. Pricing must be announced periodically based on values calculated by FRA-licensed entities following approved valuation standards. Furthermore, all investment contracts and units are mandated to be electronically stored with Authority-licensed entities.

FRA requires licensed platforms to mandate specific conditions before registering prospective investors. Crucially, the platform must verify that the applicant has passed a knowledge test, which is prepared by the platform and approved by FRA. This test is administered only after the investor has reviewed educational and introductory materials provided on the platform about the investment tool and its associated risks.

Digital platforms must provide secure digital payment and collection channels that hold all necessary approvals. Operationally, the platform must open required accounts according to the Central Depository and Registry Company’s specified mechanism. Before any activity, the Investment Fund itself must be registered and licensed by the FRA. The platform must govern all subscriptions and redemptions using a brief information memorandum approved by FRA. This memorandum, which must be published on the platform, must specify the minimum acceptable threshold required for each individual subscription issuance to be considered successful. Furthermore, the platform is required to publish a summary of the feasibility study for the projects presented by each fund.

Additionally, Platforms must establish permanent communication channels between the investment funds and registered users to promptly address all inquiries and provide follow-up. This includes a commitment to respond quickly to any user inquiry upon receipt. For quality assurance, the platform must maintain a detailed register of all complaints and the results of their study, submitting a quarterly report on these outcomes to FRA. For technological compliance, all electronic programs, systems, application infrastructure and databases used by the platform must receive prior approval from FRA.

The platform is strictly obligated to provide comprehensive disclosures that investors must review before registering or invetsing. Initial disclosures must cover fundamental details such as platform registration conditions, Platform Manager data, complaint and dispute resolution mechanisms, operational risks and the fund recovery process if the subscription fails or the investor withdraws early. Beyond registration, the platform must maintain ongoing transparency, providing regular disclosures that allow investors to actively track their holdings. These include information on fund issuances, FRA-approved brief information memorandum, the fund’s annual and periodic financial statements and details of any scheduled installment payments.

The platform must disclose the minutes of the unit holders’ assembly meetings after FRA’s approval. It must also provide details on subsequent increases approved for the size of the issuance, the current issuance size, the number of outstanding units and the conditions for execution in the event of a default.

Additionally, a semi-annual report on the Net Asset Value (NAV) of the investment unit is mandatory. This valuation must be issued by the management services company, which must utilize an asset valuation expert registered with FRA. Crucially, the valuation must include a comparative disclosure of the unit’s NAV over two financial periods, clearly stating the reasons for any change, whether an increase or a decrease.

Furthermore, the platform must disclose a summary of the economic feasibility study prepared by the Investment Manager for each targeted project. If the funding is structured as a partnership, the platform must disclose the project’s valuation based on a report from an FRA-registered expert. For asset purchases, the purchase price and the justification must be revealed if the price exceeds the fair value.

The platform must disclose details on dividend distributions and due dates, any existing insurance policies on the investments and all critical legal incidents, such as judicial rulings, arbitration awards or expropriation decisions that could impact the investment or the legal status of the assets. Any unresolved violation of the investment policy must also be disclosed and updated weekly until resolved.

In addition, the platform is held to a high standard of ongoing disclosure, requiring the immediate reporting of all material events related to the fund’s investments. This includes any new or unexpected obligations on the issuance, such as the fund taking out a loan. Beyond these specific events, the platform must disclose any material information pertaining to the investments, along with any other data or documentation specifically requested by FRA.

To initiate an investment, the platform is mandated to provide a digital subscription request form that includes an explicit declaration requiring the investor to acknowledge and accept the risks associated with the fund’s units. To guarantee a secure, centralized remote process and establish electronic ownership, the platform must open a dedicated bank account for receiving subscriptions for each individual issuance and immediately issuing a detailed electronic notification to the subscriber confirming the successful completion of the fund transfer.

The platform’s core duty is to provide immediate refunds to investors. This obligation kicks in under two crucial conditions: first, if the investor chooses to withdraw from the subscription within the designated period, and second, if the offering fails to reach the minimum coverage threshold required for it to be successful. To ensure full transparency, the platform must provide an electronic indicator that continuously and clearly displays the subscription coverage results.

Upon a successful subscription, the platform must immediately send an electronic notification to confirm the transaction with the investor. Crucially, the platform must then notify the Central Depository and Registry Company with unitholders’ data. This step is essential for formally registering the investors’ ownership of the investment unit. Finally, the platform is required to enable the immediate issuance of a digital investment unit to every subscriber as soon as released.

In all circumstances, every party to the Platform must adhere strictly to the principle of truthfulness: they are obligated not to disclose any data or information that deviates from the actual reality. Furthermore, they must actively verify the accuracy of any news they announce before public dissemination. Crucially, any party that fails to uphold this standard—by publishing misleading or inaccurate information—will bear the responsibility of compensating any persons harmed by that publication.

The parties to the Platform include: the Platform Manager, the Private Equity Fund and Investment Manager, the Management Services Company, the Subscriber or Redemption Applicant, the Central Depository and Registry Company and any other parties approved by the Authority according to the business model.

The Resolution establishes governing controls for the early redemption of investment unit, enabling unitholders to divest from the investment before the Fund’s maturity date. This redemption process, managed directly through the Private Equity Fund, must strictly comply with all rules and conditions laid out in the official Information Memorandum—a document requiring prior approval from the Authority. To execute these redemptions, the Fund Company can utilize its existing available liquidity, or it can source the necessary capital by accepting new purchase requests in the form of subscriptions or secured loans.

The Resolution enforces strict limitations and procedural requirements regarding the redemption of investment documents. The Fund Company’s ability to fulfill redemption requests is capped at a legally defined maximum of 20% of the total issued investment units.  Furthermore, the Fund Company is obligated not to retain these units for more than one calendar year. The Company is mandated to resolve the status of these units within the calendar year. It must either sell these investment units to third parties using the electronic forms approved by the Authority, or it shall reduce the size of the Fund or the specific issuance within the designated year through the cancellation (or retirement) of these repurchased units.

All repurchased investment units have no voting rights and are not entitled to any dividends for the entire period they are held by the Fund Company. Moreover, these neutralized units must be deducted from the quorum used to calculate voting requirements in the unitholders’ assembly, ensuring the integrity of shareholder decisions.

The Platform is obligated to provide the electronic forms approved by the Authority that are necessary for redemption process. These forms must include the data of the unitholder requesting redemption, the number of units requested for redemption, the dates and value of any outstanding installments (if applicable), and the net asset value (NAV) of the investment unit based on the last value calculated by the Management Services Company.