In order to provide the necessary information to investors in a way that contributes to making sound investment decisions
SCA organizes a seminar on investor relations departments at PJSCs
Within the framework of the SCA's efforts to enhance investment awareness and provide the necessary information to investors in a way that contributes to making sound investment decisions, the SCA organized a seminar under the patronage of H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the SCA Board, under the title "Importance of Investor Relations Departments at PJSCs in Creating Effective and Innovative Communication with Investors".
H.E. Dr. Obaid Al Zaabi, CEO of the SCA, delivered the opening speech, in the presence of the chairman and members of the Board of Directors of the Middle East Investor Relations Association, representatives of the largest companies (regional and global) providing financial analysis services, and approximately 140 people representing the listed companies and financial consulting and analysis companies licensed in the financial markets of the UAE.
On the sidelines of the seminar, the SCA signed a memorandum of understanding (MoU) with the Investor Relations Association, and an exhibition was held with the participation of four major regional and international companies that have platforms and systems specialized in analysing data and extracting financial indicators. These companies are Bloomberg, Thomson Reuters, Arqam and DirectFN. The purpose of this is to introduce the audience to how to use these platforms to provide financial data and statistics to enrich the websites of the listed companies with indicators and data that contribute to enhancing the ability of investors and dealers to make a sound investment decision.
Functions entrusted to investor relations managers
In the opening speech of the seminar, Dr. Al Zaabi addressed roles and functions entrusted to investor relations managers in public joint stock companies, and highlighted the great importance of this seminar in enhancing the role of investor relations officers in companies. He also stressed the importance of the participants being able to benefit from the expertise of speakers, exchange information and knowledge and provide the necessary support to investors. He also reviewed a number of SCA’s initiatives, including the initiative of conversion of brokerage firms to integrated financial services companies, and the new systems that are presented on its website to seek the opinion of industry leaders, and to identify the observations of experts, dealers and interested persons, most notably the crypto assets regulations.
In the opening speech of the seminar, Dr. Al Zaabi said: "Investor relations departments at PJSCs play a significant role in communicating with the investment community such as shareholders and investors (individuals and corporations), identifying the shareholders, targeting investors and dealing with their inquiries, reporting reactions and strategic information to the company's senior management in order to reach a clear and accurate perception on the market position, in addition to providing analyses of market and company's competitive position.
He added: "This event is important in light of the significant transformation in investor relations functions and tasks in terms of relying on interactive data and managing the company's files and services through data flow applications and electronic briefing systems that provide information to the audience on reports and research related to the performance analysis of a company, which is issued in most cases by institutions and local specialists in financial analysis of companies. Reports are prepared to follow up the performance of the department and are submitted to the senior management to take its respective decisions.
Seminar objectives
The SCA’s CEO also clarified the main objectives of organizing this seminar as follows:
1. Activate the investor relations page on the websites of listed companies in a way that helps educate investors about the shares of these companies and keep them informed of the company's updates.
This is in accordance with the provisions of Article (35) of the Decision of the SCA Chairman of the Board of Directors No. (7/Chairman) of 2016 concerning the Standards of Institutional Discipline and the Governance of Public Joint-Stock Companies.
2. Enrich the investor relations page on the websites of listed companies with statistics and financial indicators that contribute to support investors in making investment decisions, and enhance the degree of knowledge of stakeholders and their level of understanding of the data related to the company's performance.
3- Providing an opportunity for the financial analysis departments of the listed companies as well as the financial consulting and financial analysis companies to be acquainted with the latest financial applications and ways of using them in their financial analysis operations.
4. Addressing an area of weakness in the communication mechanism between the listed company and shareholders by activating the role of investor relations officers and improving the level of summary reports submitted by the company, which invalidates the role of rumour promoters in the markets resulting from some companies’ slowness in response and clarification.
SCA’s standards for the investor relations webpage
During the first session of the seminar, Ahmed Al Naqbi, Financial Analyst, Corporate Governance and Auditors at the SCA, reviewed the importance and role of investor relations officers in listed companies as a channel of communication with investors, thus ensuring that they get complete information about the company and bringing transparency and credibility to financial markets. This will enable investors to form a clear picture of the company’s performance and make informed investment decisions accordingly.
Al Naqbi talked about the key principles that help to enhance the role of investor relations in raising investor awareness and allowing for a better understanding of the risk position and expectation management, in addition to building a detailed and inclusive shareholder database to foster communication.
In the second session, he reviewed the requirements of the investor relations webpage on the website of the listed companies and the role of the site in supporting the investment decision. Al Naqbi said that it is crucial for companies to appoint an officer to handle all the tasks related to investor relations management. Such officer should have qualifications, including being bilingual in Arabic and English and being fully aware of the relevant legal and legislative requirements, in addition to holding an academic degree and experience in business, accounting, or investor relations.
He added that it is extremely important to have an investor relations webpage on the company’s website. The webpage must be updated on an ongoing basis in line with international standards and must feature the contact details of the investor relations section; the reports concerning the financial results, whether released or archived; annual financial statements, including the release dates; minutes of general meetings of shareholders; and any other material events or reports.
Al Nabi stressed the importance of creating such website to communicate the disclosed information and data to regulatory authorities, exchanges, or the public, saying that the should contain the company’s news and material events; annual and interim financial statements; previous reports by the board of directors; governance reports; ownership structure and percentages; general information related to the company’s strategy and future plans; and information about the price, which include opening and closing prices and highest and lowest price at which the stocks had been traded during the previous year. The website should also include a mechanism that allows investors to inquire about the non-received dividends or how to receive them.
He said it is crucial to start a crisis committee that includes senior staff. He added that it should be charged with developing a plan for communicating with investors and disclosing the actions taken in case the company faces a crisis. An official spokesman must be appointed to handle the communication process. Al Naqbi explained that posting presentations on the webpage will help raise awareness, provided that they clarify the financial situation of the company, along with its strategies and future projections and are updated following the announcement of financial results (on an quarterly or semi-annual basis).
In the second part, an excellent model for an investor relations webpage that met and largely applied the standards set by the SCA, was displayed as a practical model of what the investor relations webpage should look like. The second part was presented by Souad Al Serkal, Vice President of Strategic Communications at Tabreed, who had previously won the Best Investor Relations Webpage Award in the competition launched by the SCA during the first half of this year.
Al Serkal talked about the importance of investor relations in that they have become a strategic link between finance, communication, marketing, and regulatory compliance, thus enabling effective communication between the company and capital markets.
She viewed Tabreed’s investor relations webpage and said that it was designed in line with the best international practices and the guiding principles provided under Article 35 of SCA’s regulations that are intended to aid shareholders make informed investment decisions. She added that Tabreed’s website provides information such as contact details, shareholding structure, information about share price, financial statements, disclosures related to interim financial statements, annual reports, governance reports, minutes of general meetings of shareholders, dividends, and a timeline of the company’s achievements in the past 20 years.
The third session showed the importance of incorporating in the investor relations webpages and the website of the listed company financial statistics and indicators that can provide support to investors when making the investment decision. It showed also the importance of access to modern systems and applications related to data analysis and the preparation of statistics and indicators for financial analysts in financial analysis departments of listed companies as well financial analysts at financial consulting and financial analysis companies.
The companies providing financial analysis services and participants in the seminar participated in the presentation of the third session. The Bloomberg participation was presented by David Masis, the Thomson Reuters Refinitiv participation was presented by Mohamed Moussa. He reviewed the function of the investor relations team who serve as the point of contact with financial markets, investors, shareholders, and analysists in the sector and their key role in providing information to decision makers and enhancing their understanding of the investment landscape. Moussa outlined the benefits of investor relations department in terms of maintaining the investor base, enhancing the long-term value of shareholders, and building long-term credibility with the investment community.
He displayed the company’s smart application, called Eikon, that covers more than 8000 companies from around the world and over 400 measuring units of environmental, social, and governance-related data. The application allows the investor relations team to use modern technology to achieve their goals and enables users to follow market daily updates by viewing reliable news sources that cover various markets and sectors, including sector analyses, researches done by companies, and communicating with investors and analysts. Moussa talked about the significance of presenting issues that attract public and political interest, such as climate change, human rights, work ethics, and corporate governance as investors are increasingly demanding that these matters be incorporated in their investment portfolios. The Arqam participation was presented by Mustafa Al Saleh and the DirectFN participation was presented by Abdou Khoury.
Concluding remarks
The last session of the seminar was dedicated to responding to questions of dealers and representatives of listed and licensed companies participating in the event. Dr. Al Zaabi listened to inquiries and suggestions from the audience. Regarding the inquiry about the method of presenting the financial statements of companies to facilitate the way investors read them, Dr. Al Zaabi explained that all listed companies comply with International Financial Reporting Standards (IFRS) and Extensible Business Reporting Language (XBRL); that all companies have a minimum requirement in accordance with the regulations of the SCA, governance controls regulation and other regulatory legislation; and that the decision to develop the way of presenting the data depends on the company and how much the information you wishes to present to the public.
In response to a proposal on simplifying the presentation of financial statements so that they are presented uniformly for each sector of the listed companies, as well as shortening the quarterly disclosure period of financial statements to be less than 45 days, Dr. Al Zaabi said that SCA has made standard comparisons and a study of the best international standards in this regard, and found that this period is applied in many financial markets around the world, however, SCA spares no effort in conducting further studies and research on this subject to apply global best practices, and if studies show that the period can be reduced along with providing the data with the required accuracy and in accordance with the set criteria and requirements, without prejudice to the rights of investors to obtain the right data, the SCA will not mind to adopt this trend.