The Securities and Commodities Authority (SCA) has announced new regulations to protect the rights of minority shareholders and to make share trading more transparent.
The new rules are an attempt to improve the country's standing in the World Bank's prestigious Doing Business report.
SCA said that the regulations were developed in conjunction with the Emirates Competitiveness Council, a Dubai-based government body that seeks to improve the country's standings in a series of international rankings, including the World Bank's Doing Business rankings.
The UAE ranked 22nd overall in the World Bank's most recent Doing Business report, but ranked only 43rd in terms of protecting minority investors.
Among the key regulations announced yesterday is a requirement for an investor seeking ownership of more than 50 per cent of a listed company to make a general offer to minority shareholders, enabling them to exit the company on equitable terms.
“This is a new provision in line with international best practices,” said Mazen Boustany, a partner with the law firm Baker McKenzie Habib Al Mulla.
“It will give minority shareholders more options to exit, and should lead to more companies being taken private.”
The regulations also prevent listed companies from including clauses in their articles of association giving them the power to suspend trading in their own shares before or during an annual general meeting or while a transaction is under way.
The regulator retains the right to suspend trading in a company’s shares if the trading constitutes a breach of shareholder rights, “does not serve the public interest”, and other exceptional circumstances.
Also included are rules that prohibit both listed and non-listed companies from advertising IPOs and other share issuances before receiving approval to do so from the SCA.
The rules say that no subsidiary of a listed entity may hold shares in its parent company, and that if such a scenario arises, the subsidiary company has 12 months to dispose of the relevant shares.
The regulations will come into effect when they are published in the Official Gazette, an SCA spokesman said, declining to provide further details.
jeverington@thenational.ae
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