The Emirates Securities and Commodities Authority (SCA) has issued Ministerial Decree No. (206) of 2010 concerning "Allocation of Securities to Subscribers and Dividend of Subscriptions". The move was part of the SCA's efforts to encourage investors and companies interested in floating their shares for general subscription. It is also to promote competition among subscribers.
Based on the decree, banks overseeing the subscription process shall calculate the payable dividend from the date of closure of subscription to the day before the date of refunding the surplus subscription monies to their owners. This is to be done according to the laid down banking rules applicable to subscription revenues.
Commenting on the issue, H.E. Maryam Al-Suwaidi, SCA Deputy Chief Executive Officer for Legal Affairs, Issuance and Researches, said: "As part of the SCA's commitment to prepare the UAE securities markets for imminent expansion, increase in the rate of initial public offering (IPO) and the conversion of companies to public joint stock companies to list their shares for trading on the local markets, any bank overseeing subscription operations will be allocating shares for subscribers within a period of 15 days from the date of closure of subscription and shall refund to subscribers any surplus cash and dividend accumulated on them. But in the case of amounts for which securities had been allocated, any dividend yielded from them would be deposited into the company's account."
The SCA pointed out that the refund of the money, which is in line with the rules and regulations, aimed at encouraging investors by attracting them more towards subscribing for shares of companies floating their shares for that purpose.
This means a subscriber will be making profit, whatsoever, by depositing his/her money in the bank overseeing the subscription process, in a bid to subscribe for the shares of a company floating its shares for general subscription. This will boost the rate of patronage to subscription of companies' shares and covering them fully in a short time, a move which would also reflect positively on companies floating their shares for general subscriptions to get the necessary liquidity through the primary market, leading to the latter's success in achieving its major objectives of providing the necessary financial support for companies at a reasonable cost.