H.E. Mohammed Ali Al Shorafa:

• Under its new composition, the board of directors gives top priority to enhancing the performance of financial markets on different levels and underpinning their legislative structure.
• The board approved amendments to some provisions of the Guide to the Governance of Public Joint-Stock Companies.
• The board reviewed a draft decision regulating the operation of the crowdfunding platform.

Abu Dhabi, February 13: Under its new composition, the board of the Securities and Commodities Authority (SCA) held its seventh meeting headed by board chairman H.E. Mohammed Ali Al Shorafa Al Hammadi using virtual conferencing.

The meeting discussed initiatives intended to streamline corporate procedures on the one hand and promote the protection of investor rights on the other. It also discussed ways to improve the financial services and activities associated with the securities sector and bring them in line with the best international standards and practices.

The meeting was held in the presence of Their Excellencies Faisal Yousef bin Sulaitin, Dr. Ali Mohammed Bakhit Al Rumaithi, Dr. Alyazia Ali Saleh Al Kuwaiti, Dr. Abdullah Abdulrahman Al Khatib, and the SCA’s chief executive officer Dr. Maryam Butti Al Suwaidi.

Among the key decisions discussed at the meeting were:

1.  The amendment of some provisions of the Guide to the Governance of Public Joint-Stock Companies;
2.  The draft decision regulating the crowdfunding platform; and
3.  The amendment of some provisions of the rulebook on financial activities.

“The topics discussed at the meeting aimed at enhancing the performance of the country’s financial markets on different levels and promoting the investment environment while underpinning its legislative structure to bring it on par with international practices, in addition to continuing to improve the securities sector in line with the goals of the national agenda and the UAE’s vision for the next fifty years,” H.E. Al Hammadi said.

“Attendees at the meeting explored ways to strengthen the mechanisms established to maintain investor rights and create a professional and competitive environment for financial services companies, thus ensuring the highest standards of excellence and standard levels of corporate maturity similar to their counterparts in advanced markets,” he further explained.

Appointing a representative for shareholders at public joint-stock companies to attend general meetings (optional)

The board approved an amendment to Clause 4 of Article 40 of the Guide to the Governance of Public Joint-Stock Companies. Under the new amendment, the appointment of a representative to attend general meetings on behalf of shareholders of publicly-traded companies has become optional, not mandatory.

According to the Abu Dhabi Securities Exchange and the Dubai Financial Market, the actual implementation of the provision mandating the appointment of a shareholder representative (whether those on the roll of practicing lawyers or financial analysts approved by the SCA) to attend and electronically vote at general meetings demonstrated the importance of elaborating further on this provision in light of the expanding implementation scope of e-voting. An SCA poll, targeting a sample of shareholders at public joint-stock companies, also produced the same result.

Amending the ratio of independent members on boards in public joint-stock companies

The SCA board also agreed to amend the current ratio of independent members on the boards of publicly-traded companies (with a majority of independent members) to one-third. This has come into effect following the amendment of Clause 5 of Article 9 of the Guide to the Governance of Public Joint-Stock Companies.

The crowdfunding platform

The board agreed to present the draft regulations on the crowdfunding platform to the Cabinet for it to issue its decision and give the SCA oversight powers over this activity.

It is worth noting that equity-based crowdfunding means providing those looking for financing with funds in exchange for an equity stake. This is done through an electronic operating system (or platform) programmed to display crowdfunding applications.

Currently, partners in newly-incorporated companies, limited liability companies upon increasing their capital, or other types of companies, except for public joint-stock companies, fund their projects. Alternatively, those who come up with the idea behind their business may ask for funding by posting ads in newspapers and magazines.

Since businesses start with an idea put forward by people who may not have the funds needed for their businesses to come to fruition, it is through this platform and its licensed operator (the corporate person licensed to act as an operator of the crowdfunding platform) that these people will be able to receive funding. Accordingly, these platforms bring together those with business ideas and those with the money to fund, which will help create new businesses and underpin the country’s economy.

Amending provisions of the rulebook on financial activities

The board reviewed the decision it made in its fourth meeting held on August 22, 2021, mandating the SCA’s management to conduct a study on the existing requirements outlined in the rulebook on financial activities and to put forward its proposed amendments.

The board was informed that as part of the SCA’s attempts to streamline corporate procedures and safeguard the rights of investors, it carried out a comprehensive review of its regulations, especially the rulebook since it contains all the provisions and controls regulating financial activities.