Egypt's Shura Council Approves Law Providing for Regulation of Sukuk, Islamic Bonds
The new law, riding on the back of Arab Spring-fueled anticipation of a resurgence of Islamic finance in the MENA region, opens the door for all forms of sukuk issuances, including sukuk to finance debt, assets, projects, businesses, and investments.
The wide-reaching law allows for both corporate and sovereign sukuk and asset-backed as well as asset-based sukuk structures- issuances may be in foreign currency or Egyptian pounds. A provision is included for setting up a central government Shariah entity to monitor compliance, the members of which will be appointed by the Prime Minister. The new law allows for arbitration to regulate its application, and includes restrictions regarding the use of publicly held state-owned assets, if classified as public domain.
The law is expected to decrease the financial burden on the government by helping it finance the reform and infrastructure projects that Egypt badly needs. Funding derived through sukuk issuance is expected to back a number of projects in healthcare, transportation and infrastructure.
Dr. Walid Hegazy advised in the drafting of the new law, in his capacity as secretary general of the Egyptian Islamic Finance Association.
For more information, please contact Walid Hegazy, a partner with the firm who also manages the Egyptian law firm of Hegazy & Associates, which operates in association with Crowell & Moring, at +202.2.736.2315.
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