Cases of License Cancellation for the Collective Investment System

What are the Cases that Allow the Money Markets Authority to Cancel the License of Collective Investment System?

This question is answered by the capital markets lawyers’ team in RHR for advocacy and legal advices, according to what was stipulated at the thirteenth book (Collective investment system) of the executive regulation of law No.7 for the year 2010, dedicated to Money markets authority establishment and security activity regulation.

The executive regulation of the law No.7 for the year 2020 for Money markets authority allowed cancelling the license of the collective investment system by any of the following reasons:

  1. If it was found of not fulfilling of any of the provisions for granting the license.
  2. If that was to protect the interest of the system parties.
  3. If the manager, investment controller or custodian violated any of the law provisions or regulations, or he presented to the authority incorrect, inaccurate or misleading information.
  4. If the system manager required cancelling the license, yet, the authority has the right to reject his request if it was obvious to investigate a matter in relation with the system, or the parties’ interest.

It is allowed to the authority to announce the manager, investment controller, or custodian for the collective investment system writtenly of its intention to cancel the collective investment system license and its justifications, and the manager, investment controller, or custodian should make a pledge through fifteen days from the date of his announcement, which the authority would accept to avoid cancelling the system licensing.

Also, the authority – while making a decision of a collective investment system license cancellation – should assign an authorized person to perform system winding up, or to require that from the competent court. In this case, it should announce the manager, the custodian of the system as well, and writtenly, by the action taken.

Besides, the authority is permitted – if it is obvious for it of not obligation of: the manager, investment controller, or custodian of a collective investment system – by the Money markets authority establishing and security activity regulation law and its executive regulation, to order instructions to the system manager by temporarily suspending for a time limit of  refund or subscription process – or both – through the collective investment system units, on the specified date at these instructions.

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