Thursday, Jul 25, 2013
Abu Dhabi: The UAE Central Bank had ordered banks and financial companies to adhere to its Notice Number 237/2013 dated July 18, 2013, with regard to issuance and marketing of mutual funds.
The Central Bank has asked all banks and investment companies to complete a sheet in respect of mutual funds issued or marketed by the bank/company in the UAE since inception up to February 24, 2009, in order to provide information to Securities and Commodities Authority (SCA).
SCA said that as per article 2 of its regulations, it had announced in July 2012 bylaws related to mutual or investment funds which came into force on August 27, 2012.
SCA said: “The Regulations apply to all matters pertinent to local mutual funds and the promotion of foreign funds within the United Arab Emirates [the ‘UAE’]. According to Article 2 (2) of the Regulations, mutual funds established in a free zone within the UAE are treated as foreign funds. The regulations define a mutual or investment fund as essentially a financial vehicle for the purpose of investment against the issue of investment units of equal value and rights.”
Licence
As per the law, no local mutual fund may be established and no foreign mutual fund may be promoted within the UAE, prior to obtaining a licence for establishment or approval of the promotion of the mutual fund from the SCA, the licensing authority for mutual funds.
The provisions of the regulations do not apply to: accumulation of funds for purposes of investment in a joint bank account, concluding group insurance contracts, participation in social security, employee motivation programmes or fund accumulation for the purposes of forming any type of companies mentioned in the UAE Commercial Companies Law.
Wadah Al Taha, a chief analyst at Zarouni Group, told Gulf News that this move is extraordinary and unprecedented.
“This is an unprecedented move by the Central Bank. It is aimed at controlling liquidity in the market and to better organise the stock market to meet the new era which has witnessed signs of improvement financially, with the Dubai and Abu Dhabi financial markets attaining very positive results,” said Al Taha.
He added that these funds are formed by some investors and big companies.
“For example, the investors or the subscribers set up a plan to invest in a portfolio of sectors which include banking, real estate, insurance and telecommunications. They hold weekly and monthly meetings to discuss the returns and the growth and progress they achieved in this regard based on the inception year,” concluded Al Taha.
By Shehab Al ?Makahleh Staff Reporter
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