The Securities and Commodities Authority (SCA) held a meeting chaired by H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Board Chairman, using remote visual communication means.
The meeting discussed initiatives and decisions aimed at developing the financial services and activities relating to the regulation and oversight of the securities sector to bring them in line with the best international standards and practices. The board approved an amendment to an existing regulation and discussed matters pertinent to the securities sector, as follows:
Amending the decision on issuing and offering Islamic securities
As part of its efforts to improve the legislative system and implement the highest standards in issuing and offering Islamic securities to ensure their compliance with the Shariah, the board approved an amendment to the SCA Board Chairman’s Decision No. (20/R.M) of 2018 on Issuing and Offering Islamic Securities whereby Clause II of Article 3 is amended to read as follows:
“II. Without prejudice to Clause I of this Article, a Foreign Issuer wishing to offer Islamic securities in the State must provide the Authority with the following:
- A statement of any conflict between the laws applicable to the country of issue of the Islamic security and those applicable to the State, in addition to any variations in the shari’ah rules and principles in force in both.
- A statement of any differences in the taxation of the issue of the Islamic security.
- A statement of any conflict between the International Financial Reporting Standards (IFRS), the Accounting Standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Principles of the Islamic Financial Services Board (IFSB), and the Principles of the International Islamic Financial Market (IIFM) in relation to the required documents.
Additionally, a new Clause III is added to Article 3 of the regulations to read as follows:
“III. Without prejudice to Clause I of this Article, an Issuer wishing to issue or offer Islamic securities in the State or abroad, must comply with:
- The IFSB Principles.
- The AAOIFI Accounting Standards.
- The IIFM Standards in relation to the required documents.
The above amendment aims to ensure that SCA’s pieces of legislation are in line with the principles of the International Organization of Securities Commissions (IOSCO) on the issuance of Islamic securities. The amendment also takes into consideration that having Islamic issues meet international requirements, such as those of the IOSCO, will encourage local and foreign investors when making investment decisions and that the proposed standards and principles are specific to Islamic finance institutions due to the nature of this sector.
According to the amendment, Clause III of Article 4 is moved and inserted as Paragraph 9 under Clause I of Article 3 of this regulation. Clause III is considered a requirement that must be met upon issuing or offering Islamic securities.
The board instructed that the Higher Shariah Authority be provided with the proposed amendments for its review and feedback.
The board also reviewed a proposal on the formation of a joint committee charged with coordinating with the relevant authorities and put into action to cope with the current conditions caused by the coronavirus pandemic or to face the challenges in order to join efforts and exchange perspectives to shape the future of vital sectors. The committee will also be concerned with economic affairs and combating the challenges facing common economic interests. It also reviewed the details of a proposal on SCA’s role to include: ·
- Engaging the Future and Strategy Department or forming a specialized committee;
- Devising mechanisms for cooperating with other authorities;
- Creating a safe environment for investors;
- Cooperating with the youth, universities, and university students; and
- Formulating legislation that enters into force at challenging times.
After deliberating the proposal, the board decided to refer it to SCA’s management for consideration and coordination with the relevant authorities.