Tuesday, Jun 12, 2012
Abu Dhabi: The UAE’s capital markets regulator Securities and Commodities Authority (SCA) Tuesday announced an amendment to the share ownership rules and said investors will now have to reveal all direct and indirect holdings in listed companies and inform the market if they intended to acquire 30 per cent or more of a company’s shares.
“The market, after consultation with the SCA, shall withhold the purchase order if it has reason to believe that such a purchase may harm its interest or the national economy,” SCA said in a statement on its website.
Reacting to the development, Haissam Arabi, chief executive officer at Dubai-based Gulfmena Investments told Gulf News that this is a “great step by SCA in the right direction towards development of UAE capital markets in terms of transparency and corporate governance and overall development and maturity of the markets”.
He added: “If you want foreign investors to come in and want your markets to be upgraded by MSCI to emerging markets status, you need to have these rules and regulations. This will prepare the way for proper tender offering in the future.”
But it was neither clear when the guidelines would come into effect nor the penalties that would apply to infractions.
The amended rules require investors to disclose their total holdings — above the 5 per cent mark —in a publicly listed company, including shares held by family members, their companies and affiliates.
SCA said investors will also have to now disclose if they own 10 per cent or more of the shares of a parent company, subsidiary, or affiliate of a publicly-listed company.
The UAE regulator’s amendments to the ownership rules come ahead of a keenly awaited review of the country’s markets by MSCI Inc. for a possible upgrade to emerging market status.
An MSCI upgrade is expected to trigger increased foreign fund inflows and revitalise the markets’ fortunes, but lack of transparency and weak regulations are seen as a potential deal breaker for many foreign investors and fund managers that closely track emerging markets.
The move comes a month after Abu Dhabi’s state-owned firm Aabar Investments accumulated a 20.8 per cent-stake in Dubai contractor Arabtec Holding from the market through different subsidiaries.
Calls for more governance and transparency heightened after the Aabar/Arabtec moves with the construction firm’s shares more than doubling this year. Aabar, which tried to buy Arabtec for $1.7 billion in a failed 2010 takeover, had not disclosed what its intentions are with regard to the stock build-up and minority investors have been concerned their interests would be overlooked.
Aabar’s chairman — who is also now Arabtec chairman — was quoted by a local newspaper at the time as saying the fund had a 53 per cent position. A stock market source told Reuters that Aabar owned 53 per cent of Arabtec.
Aabar itself delisted abruptly from the Abu Dhabi stock market in 2010, causing an uproar among minority investors.Several regulations have been enacted in the UAE previously to boost local financial markets but enforcing these laws has been a challenge for the regulator.
Last year, the UAE postponed draft regulations on its nascent asset management industry, which were seen as a key step for investor protection and boosting market confidence, after market players voiced concerns over the clarity of some of the proposals, sources said.
The new rules also require an investor pool together all holdings in a specific company — whether held by family members, companies and affiliates — and inform the regulator if the ownership is above the five percent mark.
(With agency inputs)
By Himendra Mohan?Kumar Staff Reporter
Gulf News 2012. All rights reserved.
