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- Amendments are introduced to the regulations concerning issuing and offering shares of public joint-stock companies to incorporate a mechanism for calculating share premium and to regulate the issuing of shares at discount
- The board approves SCA's plan of priorities up until 2021 and reviews a financial analysis report on listed companies and on ADX and DFM sectors for the third quarter of 2018
The board of the Securities and Commodities Authority (SCA) held its sixth meeting, chaired by H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Board Chairman, at SCA's Dubai office. The meeting addressed a number of initiatives aimed at improving securities-related financial services and activities and bringing them in line with the best international practices and standards. It also reviewed a number of other important matters relating to the securities sector, as follows:
Crowdfunding regulations
SCA's management prepared a proposal on drafting crowdfunding regulations. As per the proposal, those seeking finance may receive specific amounts of money from investors in exchange of incorporation shares or capital increase through a platform that is programmed to display crowdfunding applications in the market.
The board reviewed the most important aspects of the proposed regulations in addition to a presentation on regulations for licensing crowdfunding platform operators and issued a directive to go ahead with the formulation of the regulations, as per the plan. It stressed that the regulations will provide for the protection of the rights of financiers, the establishment of supervisory measures that ensure sound implementation and reduced risks, and the obligation that platform operators know their customers through the KYC (Know Your Client) documents. SCA will make sure to adopt the best international practices and to hold consultations with the industry and with domestic and international markets during the preparation phase.
Amending regulations concerning issuing and offering shares of public joint-stock companies
With reference to Article (196) of Federal Law No. (2) of 2015 on Commercial Companies, and as part of SCA's role to review and monitor the implementation of regulations, SCA's management prepared a proposal to regulate share capital increase, as per the following two mechanisms:
- Issuing new shares at a premium, pursuant to the above law, which will benefit the company and its shareholders. This will support the financial standing of the company and will allow for an increase in dividend payments in the future.
- Issuing new shares at a discount. This will enable companies, whose shares' market value falls below their nominal value, to issue new capital increase shares. The new shares should be issued at a value that does not exceed the market value to encourage investors to subscribe to the shares and to strengthen the financial standing of those companies.
The board also reviewed the amendments proposed to the SCA Board Decision No. (11/Chairman) of 2016 concerning Regulations on Issuing and Offering Shares of Public Joint-Stock Companies, and accordingly approved the introduction of a mechanism for issuing new shares “at a premium" and the regulation of mechanisms for issuing shares “at a discount".
The board also agreed to a policy proposed by SCA's management concerning options to dispose of treasury shares in a manner consistent with the law and the applicable regulations.
Financial analysis report of listed companies
As part of its efforts to monitor the conditions of locally listed public joint-stock companies to ensure their financial stability, and pursuant to the provisions of Federal Law No. (2) of 2015, the board reviewed a report on the financial analysis of listed public joint-stock companies and the sectors at the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) for the third quarter of 2018.
In a related context, the board issued a directive to consider drafting regulations for monitoring the performance of auditors and establishing requirements that ensure that they perform their duties to the fullest as well as to coordinate with the Ministry of Economy concerning the implementation of the same standards to other external auditors falling under the ministry's supervision.
World Investor Week 2018
The board also reviewed a report about SCA's participation in World Investor Week 2018—launched by the International Organization of Securities Commissions (IOSCO) early last October—along with ADX, DFM, and the Dubai Gold and Commodities Exchange (DGCX). The events organized as part of this week included awareness-raising activities (TV channels and newspapers), awareness-raising seminars, field trips for students to trading floors, and awareness-raising activities on SCA's social media accounts (including posting animated awareness-raising videos and short text messages). SCA also posted a draft document on investor rights on its website for industry feedback.
SCA's priority projects and initiatives
The board was informed of a memo prepared by SCA's management concerning SCA's high-priority projects and initiatives up until 2021. Accordingly, it issued a directive to publish these priorities on SCA's website to be viewed by the general public and to coordinate with strategic partners and concerned parties regarding the implementation of the plans associated with these initiatives.
These priorities include creating advanced and sustainable financial markets, finding a leading Islamic capital market and governance regulations that are in line with the best international practices, regulating financial technology and initial coin offerings (ICOs) and trades, using blockchain technology, developing innovative solutions to regulate and supervise capital markets, providing unconventional sources for small and medium enterprises, maintaining the country's position among the best ten countries in competitiveness (minority investor protection index), and launching joint initiatives to increase market depth and liquidity.
The board reviewed, at the beginning of the meeting, the minutes of the fifth meeting and followed up on the implementation of the decisions and recommendations made.
