Dubai revamps rules for listing local joint stock companies

Companies must list on the DFM or Nasdaq if they generate more than half their revenues from Dubai

The DFM Company posted a 14 per cent increase in net profit of Dh137.9 million in 2020. Reuters

Sheikh Mohammed bin Rashid, prime minister and ruler of Dubai, issued a decree revamping the requirements to list local joint stock companies on the emirate's bourses.

All non-local companies are required to list their shares on the Dubai Financial Market (DFM) and Nasdaq Dubai if they generate more than half of their annual profits or revenues from activities in Dubai, the emirate's media office said in a statement on Saturday.

Companies are also required to list if their total assets in the emirate amount to 50 per cent or more of their entire assets.

"The listing should be completed within a year of the date of reaching this percentage," the media office said. All companies are required to change their status a year on from the issuance of this decree.

Non-local companies which generate less than 50 per cent of their revenues from Dubai are also eligible to list on local exchanges while foreign companies can list their shares in local bourses either in the form of a primary or secondary listing.

The new decree directs all local public joint stock companies established in Dubai, including those set up in special economic zones or free zones including the Dubai International Financial Centre, to list on the emirate's exchanges, according to the Dubai Media Office statement.

Companies that are already listed on the local stock markets can have secondary listings in other markets.

"Domestic listings will be positive in bringing new capital to the economy," Monica Mallik, chief economist at Abu Dhabi Commercial Bank, said.

Dubai Media Office cautioned that registration and licences of the companies that do not adhere to the latest regulations would be cancelled, the statement added.

The latest move comes as Dubai looks to increase listings on its local markets, while becoming an attractive destination for foreign investors.

The move "gives protection to people who invest in publicly listed companies", Nabil Rantisi, general manager for wealth management at Dubai-based Daman Investments said.

The decree could also help in boosting trading, analysts said.

"Listing of firms that play an integral role in economy could widen the market representation and boost trading activity," Raghu Mandagolathur, head of research at Kuwait Financial Centre, said.

"Presently, financial sector accounts for 60 per cent of the Dubai market while it represents only 11.6 per cent of economic activity. The opportunity for diversified sectors such as manufacturing, trade, hotels & restaurants to be represented in the stock market is immense."

Jassim Alseddiqi, group chief executive of Shuaa Capital also welcomed the move saying: "We believe this to be a long-term positive for corporates, which will benefit from the numerous advantages of a public listing - including enhanced reputation and access to capital.

"Furthermore, we believe this has the potential to be a game-changer for the country’s capital markets, setting them firmly on an exciting new growth path."

The commercial and trading hub of the Middle East is forecast to expand 4 per cent in 2021, according to official data.