The FRA Board of Directors, chaired by Dr. Mohamed Farid, issued Decision No. 194 of 2025 as part of its goal to create a comprehensive legal framework for digital investment platforms. This follows previous regulations for digital platforms dedicated to real estate investment funds.
The new decision aims to provide a safe, transparent, and
efficient investment environment for PE and VC.
The decision defines a digital platform for PE and VC fund
investment as a digital business model approved by the FRA that uses technology
to conduct non-banking financial activities. It allows for the subscription or
redemption of fund certificates and displays the necessary data and information
for these transactions.
These platforms must provide all necessary disclosures for
investors to track their investments and periodically announce the pricing
based on values calculated by FRA-licensed entities, adhering to FRA-approved
valuation standards. All contracts and investment certificates are to be stored
electronically by licensed entities.
Investor Registration: The platform must register investors
after verifying they meet all requirements, most notably passing a knowledge
test approved by the FRA. This test is administered after the investor reviews
educational materials about the investment tool and its associated risks.
Secure Transactions: Platforms must provide secure digital
payment and collection channels with the necessary approvals and open accounts
according to the mechanism set by the central depository and registry company.
Fund Disclosures: Funds must be registered on the platform
after FRA licensing. Subscription and redemption must follow a short-form
memorandum approved by the FRA and published on the platform, which includes
the minimum subscription threshold for each issuance to succeed. A summary of
the feasibility study for projects presented by each fund must also be
disclosed.
Investor Communication: Platforms must provide continuous
communication channels between the funds and registered investors to answer
inquiries. They must respond promptly, maintain a complaints register, and
submit a quarterly report on complaints and their resolution to the FRA.
The decision requires the platforms to disclose critical
information to investors before registration and investment, including
registration terms, platform manager data, complaint handling, dispute
resolution, operating risks, and the mechanism for recovering funds if an
investor withdraws or the minimum subscription is not met.
Ongoing disclosures for investors tracking their investments
include: the FRA-approved short-form information memorandum, annual and
periodic financial statements for the fund, the net asset value of the fund
certificate every six months, based on an appraisal by a registered valuation
expert, showing a comparison between two financial periods and explaining any
change in value, a summary of the economic feasibility study for each target
project, profit distributions and their due dates, and any material events, new
obligations (such as fund borrowing), or violations of the investment policy.
The regulation requires a digital subscription application
that includes the investor’s explicit acknowledgment of the risks associated
with the fund. A dedicated bank account for subscriptions must be opened for
each issuance, and an electronic notification must confirm successful transfer.
If an investor withdraws during the specified period or the
minimum subscription is not covered, the platform is obliged to immediately
refund the money. An electronic indicator of the subscription coverage results
must be continuously and transparently available to investors.
The decision also organizes the redemption of certificates
before the fund's term ends, allowing it according to the conditions in the
FRA-approved information memo. A fund company may finance redemption requests
from available liquidity, new subscriptions, or loans, within the legally
allowed maximum of 20% of the total issued certificates.
All parties involved in the platform—including the platform manager, the PE fund, the investment manager, the management service company, and the central depository—are liable to compensate affected parties for the publication of any inaccurate or misleading information.