Egypt Transfers Corporate Valuation from GAFI to FRA-Accredited Valuers

Egypt has issued new legislation transferring the mandate for corporate and asset valuations within investment deals and mergers and acquisitions from the General Authority for Investment and Free Zones (GAFI) to licensed and accredited valuers registered with the Financial Regulatory Authority (FRA), according to reports.

The legislation aims to enhance the independence of the valuation process and separate it from the administrative authority overseeing investments, thereby reinforcing governance principles and providing greater guarantees to foreign investors seeking assurance regarding the objectivity of valuations.

FRA-accredited valuers will hold the authority to conduct independent company valuations during phases of incorporation, merger, ownership transfer, and bankruptcy, closing the door to potential conflicts of interest that may arise when a single government entity both values and approves assets simultaneously.

This legislation aligns with Egypt's broader drive toward institutional reform and improving the investment climate, at a time when the government seeks to attract additional foreign direct investment to support foreign reserves and create employment opportunities, as reported.

What do these terms mean?

Corporate Valuation: The process of determining the fair economic value of a company or its assets based on various financial and market factors.

Financial Regulatory Authority: The Egyptian authority responsible for regulating and supervising non-banking financial markets, securities, insurance companies, and investment funds.