Cabinet Resolution No. (11) of 2000 Concerning the Regulations as to Market Licensing and Supervision

§Preamble

THE COUNCIL OF MINISTERS’DECISION NO. (11) OF

2000CONCERNINGTHE REGULATIONS AS TO MARKET LICENSING AND SUPERVISION The Council of Ministers,

Having considered the Constitution, Federal Law No. (1) of 1972 concerning the Competences of the Ministries and the Powers of the Ministers, as amended, Federal Law No. (4) of 2000 concerning the Emirates Securities and Commodities Authority and Market, Council of Ministers Resolution No. (193/18) of 2000 of 13/3/2000 concerning the constituting of the Board of Directors of the Emirates Securities and Commodities Authority, The Resolution of the Authority's Board of Directors at its meeting No. (1) of 2000 on 25/3/2000 on the approval of the Regulations as to Market Licensing and Supervision, Council of Ministers Resolution No. (384/10) of 2000 on the Regulations as to Market Licensing and Supervision, and On the basis of the proposal of the Minister of Economy and Commerce and the Chairman of the Authority's Board of Directors and the approval of the Council of Ministers,

Has resolved:

§Article 1

In the application of the provisions of these Regulations, the following words and expressions shall have the meanings set forth opposite each of them, unless the context of the provision dictates otherwise:

State: The State of the United Arab Emirates.

Law: Federal Law No. (4) of 2000 concerning the Emirates Securities and Commodities Authority and Market.

Authority: The Emirates Securities and Commodities Authority. Market: A securities and commodities market licensed in the State by the Authority.

Board: The board of directors of the Authority.

§Article 2

No Market may undertake the activity of trading in securities and commodities in the State unless licensed to do so by the Authority.

§Article 3

To grant any market a license, the following conditions shall be met:

1.It is in the form of a local public establishment.

2.It occupies an appropriate building equipped with the technical equipment necessary to conduct its activity electronically.

3.It is electronically linked with the other Markets of the State so as to give effect to a common trading system between the Markets.

§Article 4

License applications shall be submitted to the Authority in the form prescribed for that purpose, supported by the following documents:

1-The local resolution on establishing the market.

2-A statement of the names of the members of the market's board of directors, with an accompanying submission from each member of the following: a.An acknowledgment signed by each member stating that he is not a member of the board of directors of a public joint stock company, and that he is not a partner in a financial brokerage company or a representative of a financial broker. b.A written declaration made by him to the Authority stating the securities owned by him and by his spouse and minor children, and also the holdings of his spouse and minor children with any broker.

c.An undertaking by him to declare in writing to the Authority any change occurring in what he has previously declared under paragraph (b) within one week at most from the date he becomes aware of the change.

3-A statement in the name of the market's director general and his deputy, with an accompanying submission from both of them including the following: a.A written declaration made by him to the Authority as to the securities owned by him or by his spouse and minor children, and also his holdings and the holdings of his spouse and minor children with any broker.

b.An undertaking by him to declare in writing to the Authority any change occurring in what he has previously declared as to the securities owned by him or by his spouse and minor children, and also as to his holdings and the holdings of his spouse and minor children with any broker, within one (1) week at most from the date he becomes aware of the change.

4-The organizational structure of the market and a statement of its specialist technical and administrative authorities.

5-The internal regulations of the market which set out the manner of appointing its director general and his powers, the procedure for calling meetings of the board of directors of the market, the place, quorum and validity of such meetings and the passing of resolutions.

6-The electronic registration system for trading, deposit, clearing, and settlement operations, and the capacity for electronic linking with the other Markets in the State.

§Article 5

The Authority shall prepare a register to record each Market’s license application, assigning each application with a serial number according to the date of receiving such application. Each application shall be given its own file in which the relevant documents and any other procedures shall be filed. The Authority shall provide the person submitting the application with a receipt evidencing submission of the application, the date thereof and its serial number in the named register.

§Article 6

The Authority shall examine the license application within a period not exceeding fifteen days from the date of submission of the application. If the application is complete, a recommendation shall be made to submit it to the Board to take a decision thereon. If not, the concerned parties shall be notified of the requirement to complete the application within a period not exceeding fifteen days from the date of such notification.

§Article 7

The application shall be placed before the Board which shall take a decision thereon within a period not exceeding thirty days from the date of submitting the complete application for the decision thereof. The Board may, before making its decision, request any particulars it deems necessary in order to make its decision.

§Article 8

The concerned parties shall be notified of the Board's decision within a period not exceeding one week from the date it was issued.

§Article 9

A decision of the Authority to reject a license application shall state the reasons for such rejection. The applicant for the license shall have the right to re-submit the application when the reasons no longer subsist.

§Article 10

The Authority may, in coordination with the Markets where required, conduct the

inspections and investigations necessary to ensure that the regulations mentioned in Article (4) of the Law are being applied. The Authority shall define the scope of the investigation, and designate the person to conduct it on its behalf.

§Article 11

The Authority may accept information and complaints made relating to a Market or broker activity, conduct the necessary investigations, require any person to submit a written statement as to the circumstances and factors relating to the activity which is the subject-matter of the information or complaint, and take the appropriate decisions pursuant to the provisions of this law and the regulations implementing the Law.

§Article 12

The inspection team appointed by the Authority may enter the Markets’ and brokers' offices during working hours, inspect records and documents, and require that the team is provided with any document or information the team deems necessary to perform their task.

§Article 13

The Authority may, while it is conducting an investigation or inspection, order the party under investigation not to dispose the securities in their possession and to refrain from withdrawing any funds or securities deposited with another party.

§Article 14

Investigations and inspections shall be deemed confidential documents which may not be made public.

§Article 15

The Market shall present its balance sheet, profit and loss accounts and annual financial statements certified by an auditor entered on the roll of practicing auditors within one month from the end of its financial year.

§Article 16

The Market shall provide the Authority with such reports and data as the Authority requests and shall issue such press releases as are necessary to ensure transparency of information and transparent disclosure.

§Article 17

The Authority may look into the appeals submitted to it against the decisions made by the Market’s board of directors with respect to the decision of serving a warning or imposing a fine of no more than one hundred thousand Dirhams.

§Article 18

The Board may resolve, by a majority of its members present, to temporarily halt trading of securities in a Market, or in the shares of any company, or transactions in any securities, upon the occurrence of exceptional circumstances or circumstances that threaten the proper and regular functioning of that Market.

§Article 19

The Board may resolve, by a majority of its members present, to freeze, suspend or bring back into force any rules or regulations relating to the Market or any of its operations.

§Article 19 bis — [1]

The Board may impose any of the following sanctions in the event that the Market fails to pay the amounts due to the Authority, in accordance with the following ranking:

(1)The giving of a warning to the Market, stating the financial breach. (2)The giving of notice to the Market as to the necessity of rectifying the contravention within thirty (30) days of the date of the notice. (3)The levying of a penalty for delay in payment at the rate of: a-(1%) of the amount due in respect of the first month.

b-(2%) of the amount due in respect of the second month. c-(5%) of the amount due in respect of each month following the second month. A part-month shall be considered an entire month in calculating such penalty. (4)The temporary suspension of the operation of the Market in the event that such breach continues, or submitting the matter before the Board for its consideration, and to take action as it sees fit.

§Article 20

This resolution shall be published in the Official Gazette and shall come into force as from the date of its publication.

The Prime Minister

Issued by us in Abu Dhabi On 1 Rabi' Al-Akhar 1421 Hijri Corresponding to 3 July 2000 AD

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