Cabinet Resolution No. (139) of 2023 for the Amendments of some Provisions of Cabinet Resolution No. (36) of 2022 regarding the Regulation of the Activity of the Operator of a Crowdfunding Platform

§Preamble

The Cabinet Resolution No. 139 of 2023 for the amendments of some provisions of Cabinet Resolution No. 36 of 2022 regarding the regulation of the activity of the operator of a

crowdfunding platform.

The Cabinet, after reviewing the constitution and Cabinet Resolution No. 36 of 2022 on the regulation of the activity of the operator for crowdfunding platforms, and based on the presentation by the Chairman of the Securities and Commodities Authority’s Board of Directors, and the approval of the Cabinet,

Decides:

Article 1:

The texts of Articles (6), (7), (8, Item 2, Paragraph c) are replaced by the provisions of Cabinet Resolution No. 36 of the year 2022, referred to in the following texts:

Article 6

Obligations of the operator towards investors:

The operator undertakes to provide the following to the investors

1. Entering into an agreement with the investor as per the conditions specified in the Rulebook, and to specifically include data related to investment in financing applications. This shall explicitly state the investor’s awareness of the investment risks, including the inability to sell or transfer ownership to other investors after the company has been established, except in accordance with the applicable laws in the country.

§Article 2 — Disclosing to investors their rights to retract their investment decisions and the mechanisms

for exiting projects funded by them through the platform after investment and execution of the project has taken place, as well as clarifying the difficulty of exiting, all in accordance with the provisions of this resolution.

§Article 3 — Disclosing the mechanisms available to investors to receive distributions of profits earned on

their investments or due to them from the financing applicant.

§Article 4 — Educating the investor on how to invest through the platform and the type of investment

offered to them.

§Article 5 — Ensuring that the investments of an investors– except for professional investors or

counterparties –during a twelve-month period do not exceed, the following amounts:

1. A sum of thirty thousand dirhams (AED 30,000) is for each financing applicant for all requests presented by that applicant on the platform.

2. A sum of one hundred thousand dirhams (AED 100,000) for all financing requests presented on the platform.

§Article 6 — Restricting transactions on the platform to the aggregation of funds for the purpose of

establishing a company or increasing the company’s capital. Refraining from selling or transferring partners’ ownership to other investors after establishment through the platform.

§Article 7 — Retaining the funds deposited by investors in an escrow account with one of the licensed

banks in the country or a licensed foreign bank outside the country, in accordance with the regulations issued by the authority. This retention shall continue until the proposed offer period ends or the offer is closed to complete the required financing.

§Article 8 — Segregation of the operator’s bank accounts from bank accounts where investors’ monies are

held (escrow accounts) when presenting bank balances in the financial statements and accompanying footnotes.

9. The transfer of aggregated funds to the financing applicant shall occur within the agreed- upon period between the parties, following the completion of the required financing in accordance with the provisions of this resolution. This is contingent upon confirming and

verifying the financing applicant’s fulfillment of their obligations as stipulated, following the established procedures in the state. The financing applicant must undertake all necessary establishment or capital increase procedures with the relevant authorities in the state.

§Article 10 — Establishing procedures to ensure the financing applicant’s compliance with their

obligations towards investors, including the completion of ownership procedures for their ownership interests.

§Article 11 — Closing the offering immediately upon reaching the maximum required financing, even if

the financing applicant’s proposed offering period has not concluded. Ensure that the aggregated funds do not exceed the maximum target amount.

§Article 12 — Returning funds to the investor within 5 days in the following circumstances

a. From the end date of the offering period without reaching the minimum target amount unless the financing applicant is satisfied with the aggregated amount.

b. From the date of the financing applicant’s failure to fulfill their commitments or a material change occurring, either during or after the offering period.

c. From the date of cancellation of the financing request.

d. From the date of exceeding the aggregated funds beyond the maximum target amount, limited to the surplus funds only.

e. From the date of the investor retracting their investment decision in accordance with the provisions of this resolution.

§Article 13 — Ensuring that there are no material changes in the financing request, the financing

applicant, or the project itself.

§Article 14 — Publishing the business plan, financial feasibility, and economic aspects of the project

related to the financing request on the platform, with a specific and clear presentation. Ensure the accuracy of all documents and procedures related to them.

§Article 15 — Publishing information about the financing applicant on the platform and communication

channels, along with details about other projects previously funded through the platform and their performance, at least 14 days before allowing investors to invest in the project.

§Article 16 — Providing credit information about the financing applicant, the chairman, and the board

members, if the financing applicant is a legal person, provided that it is issued by the Etihad Credit Bureau or the concerned entity if the individual is a foreigner.

§Article 17 — Publishing the applicants’ disclosures on the platform while retaining these disclosures and

verifying their validity and accuracy.

§Article 18 — Immediately disclosing on the platform any errors, misleading information, or investment

risks related to the financing applicant or their projects and investments.

§Article 19 — Promptly disclosing to the investor if the financing applicant decides to settle for the

aggregated amount after the expiration of the offering period without covering the minimum required, within the period specified by the regulatory authority.

§Article 20 — Verifying the absence of any fraudulent activities, deception, or harm to investors by the

financing applicant.

§Article 21 — Rejecting the financing applicant’s offer on the platform or removing their listing from the

platform if it becomes apparent that the financing applicant is compromising the interests of investors or violating the provisions of this resolution or any applicable laws of the state.

§Article 22 — Refraining from providing investment advice to investors, negotiating financing offered on

the platform, or advertising financing requests through any means other than the platform. An exception to this is when the operator advertises financing requests through crowdfunding platforms owned by them outside the state, in accordance with the conditions set by the Authority.

Article 7

Financing Applicant Obligations:

1. Obtain preliminary approval from the competent authorities for the intended project to be presented on the platform.

2. 2. Immediately disclose, during the financing request period and in accordance with the operator’s procedures, the specified data below:

a. All information related to the applicant, its management, financial information, business plan, project purpose, minimum and maximum amount required for the project, and the proposed offering period not exceeding 15 working days. It may be extended for the same period, in accordance with the operator’s procedures, without harming the investors’ interests.

b. Any data, information, errors, or material changes related to the applicant or its projects.

c. Interests and any potential or expected investment risks.

d. Mechanisms and procedures for investors to exit the investment, in accordance with the laws applicable in the State.

3. Refrain from presenting the financing request simultaneously on more than one platform and from collecting any funds related to the financing request presented on the platform by any external means.

4. The total financing applications for the applicant and its affiliated entities – parent company, subsidiary, sister company, or associated companies – shall not exceed AED 15 million throughout the company’s duration. The Authority may adjust the specified amount in this provision according to the requirements of the public interest.

5. Pay the fees due to the operator.

6. Implement the purpose of the financing request by initiating the establishment of a company or increasing the capital of an existing company in accordance with the provisions of the Commercial Companies Law within 5 working days from the expiration date of the offering period, whether the required amount has been collected or satisfied with the amount collected, or by closing the offering immediately upon reaching the maximum required financing.

Article 8, Item 2, Paragraph C

C. Expiry of the offering period without covering the minimum required amount.

Second Article:

1. Cancel Item 5 of Article 3 of Cabinet Resolution No. 36 of 2022 regarding the crowdfunding platform operator activity.

2. Abolishes any provision conflicting with or contrary to the provisions of this resolution.

Third Article:

This resolution shall be published in the official gazette and shall take effect from the day following its publication.

Mohammed bin Rashid Al Maktoum

Prime Minister