Issuance of Resolution No. 154 of 2026 on the Establishment of Hedge Funds in Egypt

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Introduction

Resolution No. 154 of 2026 has been issued by the Board of Directors of the Financial Regulatory Authority of Egypt (the “FRA”), marking a significant development in Egypt’s capital markets by establishing a regulatory framework governing the establishment of hedge funds (the “Resolution”).

Key Developments

Pursuant to the Executive Regulations of Capital Market Law No. 95 of 1992 (the “Capital Market Law”), a hedge fund is defined as a type of investment fund that invests in equities, debt instruments and/or other financial instruments. It aims to invest in highly liquid equities, debt instruments and other securities and financial instruments, and may engage in transactions through specialised stock exchange trading mechanisms, in each case in accordance with the investment policy set out in the relevant prospectus (the “Prospectus”). Its units may be offered through either a public offering or a private offering.

The Resolution also provides an opportunity for existing investment funds whose investment policies target listed shares and other securities listed on the Egyptian stock exchange (“EGX”) with the option, should they wish to direct their fund assets towards the areas in which hedge funds invest, to submit a request to the FRA to convert into multi-class funds for the purpose of investing in listed securities and financial instruments.

A hedge fund’s investment structure shall comprise all or any of the following:

• 1. Securities and financial instruments listed on the Egyptian stock exchanges.
• 2. Units of investment funds listed on the EGX.
• 3. Forward contracts, futures contracts and options contracts traded on the EGX.
• 4. Other financial instruments approved by the Board of Directors of the FRA.

For the establishment of a hedge fund, a Prospectus shall be submitted to the FRA and shall include, inter alia:

• a) The hedge fund’s investment policy, including the investment areas targeted by the offering, the structure of the hedge fund’s investment allocation, as well as the minimum and maximum investment limits applicable to each asset class;
• b) The criteria applicable to the target investor; and
• c) A description of the roles and obligations of the investment manager, i.e., the company responsible for managing the hedge fund’s assets and liabilities.

The investment manager’s responsibilities shall include, inter alia:

• Having the necessary expertise in the field in which the hedge fund invests;
• Ensuring the existence of the necessary assurances and safeguards in respect of the investment operations to be carried out by the hedge fund; and
• Providing periodic disclosures to the investors.

The FRA shall review the Prospectus and issue its decision regarding the establishment of the hedge fund within fifteen (15) days from the date on which all required documents have been submitted.

It is also important to note that, as hedge funds are classified as investment funds, the provisions of the Capital Market Law and its Executive Regulations shall apply thereto.

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