Stock market regulator issues warning over disclosure delays

The UAE's stock market regulator has warned companies that their shares will be suspended if they fail to meet deadlines for filing corporate earnings.

The Securities and Commodities Authority has issued two circulars over the past month reminding public companies that failure to release semi-annual and annual financial statements immediately after board meetings will result in the suspension of shares from trading.

The market regulator sent its first warning on January 15 and its second on Tuesday, a filing posted on the Dubai Financial Marketshowed yesterday.

The regulator said it would "halt trading on the shares of companies that do not comply with the disclosure of financial statements immediately after the approval of the board", adding that such action by companies contravenes the rights of shareholders.

The reminder comes as corporate earnings season is well under way, with local companies announcing annual results and recommending dividend payouts.

"It's good that the regulator is monitoring the adherence of listed companies through the circular," said Mohammed Ali Yasin, the managing director at National Bank of Abu Dhabi's brokerage arm.

"They want to make sure that as soon as the numbers are available, they are immediately disclosed to the public and the shareholders."

The regulator has exercised its muscle in recent years to enhance transparency and governance of the Abu Dhabi Securities Exchange and DFM after the 2008 global financial crisis.

The SCA is in the process of drafting regulations to govern the country's nascent funds management industry.

Last year, it introduced rules to govern margin trading, in which investors trade with borrowed money set aside for that purpose.

Before the global financial crisis of 2008, securities firms borrowed loans from banks and extended them to high-net worth clients as unregulated facilities.

The SCA also introduced regulations to govern short-selling, a practice in which an investor sells a stock he does not own with the aim of buying it later and making a profit. "These regulatory changes are actually in the benefit for the market as a whole in a bid to secure an upgrade in the classification of our markets," said Marwan Shurrab, a vice president and fund manager at Gulfmena Investments in Dubai.

The UAE is a candidate to win emerging markets status by the international index provider MSCI. It is currently classified a frontier market.

The ADX General Index is up 9 per cent this year, while the DFM General Index is up 16 per cent.