The board of the Securities and Commodities Authority (SCA), chaired by H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Board Chairman, held its 15th meeting by means of remote visual communication.

The meeting discussed initiatives and decisions aimed at developing the financial services and activities associated with the regulation and supervision of the securities sector to bring them in line with the best international practices and standards. It also discussed actions taken by SCA, under directives from the Cabinet, in collaboration with its financial market partners to contain the consequences of the coronavirus and mitigate its negative effects on financial markets and companies operating in the securities field. Among the key securities-related matters and issues discussed at the meeting are: 

The board reviewed a report about the external and internal actions taken by SCA, under directives from the Cabinet, to contain the consequences of COVID-19 on the country’s financial markets. External actions included a decision to amend the limit down on stock prices. The decision, which went into effect on March 18, set the limit down for stock prices at 5%, meaning that they will be allowed a maximum decline of 5% in a single trading day.

The actions also included a decision extending the deadline for joint-stock companies to convene their annual general meeting to June 30 to avoid risks that may result from failure to hold their general meeting within the legally specified period, scheduled to expire on April 30. 

A circular was also issued containing exemptions from the implementation of some of the provisions of the share buyback regulations with the purpose of facilitating buybacks. 

Among the actions taken is that electronic voting in general meetings was made mandatory where shareholders can vote at the meeting without having to attend in person. This came in response to directives from the wise government to avoid gatherings in the present time. Once applied, electronic voting proved extremely successful.

SCA also sent a circular to licensed companies notifying them of the extension of the period during which the 2019 annual financial statements must be disclosed and the postponement of the disclosure of the interim financial statements, ending March 31.

It issued another circular to listed companies, requiring them to report the preventive actions they have taken to maintain public health and safety and curb the spread of the coronavirus. It also instructed them to have a calculated plan and a written policy to ensure business continuity and to put into action their recovery plan in the event of an emergency.

Instead of field inspections, SCA implemented its remote visual inspections policy, using Microsoft Teams. It also sent a circular to all its customers, urging them to use the smart and electronic services available at its website (www.sca.gov.ae) and smart devices instead of visiting its customer service centers.

In this context, SCA held a meeting with the financial markets to stress that short selling is not permitted. The Abu Dhabi Securities Exchange (ADX) announced mid-March that it closed the trading halls in its headquarters and branches. The Dubai Financial Market (DFM) followed suit the next day. SCA also met with the governor of the Central Bank to coordinate the actions that will help limit the consequences of the pandemic on the securities market.      

 

• Activating the Emergency and Business Continuity Committee and having it remain in continuous session.·       
• Putting into effect the remote work applications and arrangements, including the OpenText licensing systems, Mersal, and customer-service related systems.·   
• Forming an Emiratization committee concerned with the Emiratization initiatives in the real estate sector following a decision by the board chairman, in coordination with the Ministry of Human Resources and Emiratization.·     
• Issuing circulars to licensed and listed public joint-stock companies containing business continuity-related actions

 

Amendment of a decision on the general clearing member activity

 As part of its efforts to improve the legislation that regulates the securities markets operating in the country and to regularly revise the legislation and regulations regulating the financial services to ensure that they keep pace with global market developments, the board approved the proposed amendment to the SCA Board of Director’s Decision No. (36/R.M) of 2019 Concerning General Clearing Member Activity, which states that custodians are exempted from the application of the decision concerning the general clearing member and that they must comply with the provisions of the SCA Board of Director’s Decision No. (29/R) of 2009 Regulating Securities Custody Activities and its amendments.

ISO certification

 As part of its efforts to follow up on matters related to SCA’s internal performance, the board reviewed a report about the ISO certificates that SCA obtained in the first quarter of this year in line with the directives of the wise government to adopt international principles and methodologies that promote performance and empower human resources. The ISO certificates received include ISO 30401-Knowledge management systems, ISO 20400-Sustainable procurement, ISO 31000- Risk management, BS 13500-Governance management, and ISO 56002-Innovation management.   

Report about the financial analysis of the financial statements of listed companies 

As part of its efforts to follow up on the conditions of local listed public joint-stock companies and to implement the provisions of the Commercial Companies Law No. (2) of 2015, the board examined a report on the performance of financial markets and the results of measuring the impacts of the support provided to them. It also reviewed a report about the financial analysis of the 2019 annual financial statements of public joint-stock companies listed on ADX and DFM.

The board recommended that a specialized study be carried out to: measure the financial performance of public joint-stock companies in the past three years, assess the effectiveness of corporate boards, and present future scenarios to raise the efficiency of corporate boards and enhance the financial performance of these companies.