Public Offering of Shares Regulations

Regulates offerings of shares by public joint stock companies: initial offerings and capital increases, the offering application and prospectus, book-building, parties to the offering, other capital increase mechanisms, offers by foreign and free zone companies, and penalties.

Summary

Decision No. 11/Chairman of 2016 is the rulebook for offering shares to the public in the UAE onshore market. Article 2 makes Authority approval (now the Capital Market Authority, CMA) a precondition for issuing or offering shares of a local public joint stock company (PJSC), a foreign company or a free zone company in the State, and the decision covers subscription, allocation, the parties to the offering and appraisers of in-kind contributions. It was issued on 6 June 2016 and took effect on publication (Article 43). It remains in force as amended by Decisions No. 22/Chairman of 2017 (employee incentive schemes), 6/Chairman of 2019 (share premium and discount), 27/Chairman of 2019 and 25/Chairman of 2020 (free zone and foreign company offerings); Decision No. 13/Chairman of 2021 cancelled Articles 20 to 25 on licensing financial and listing advisers, which now sit in the Regulations Manual.

The first chapter sets the routes. A company offering on incorporation may do so only to qualified investors, with a minimum subscription of AED 5 million and working capital for 12 months (Article 3). A company converting into a PJSC needs fully paid capital, two years of audited accounts and net operating profit of at least 10% of capital in each of the previous two years (Article 4). Capital increases may use authorised capital, a special resolution implemented within a year, or a two-year issuance programme (Article 6), with a share premium based on the six-month average market price or, where the Cabinet allows, a discount (Article 6 bis). Rights must be announced 20 business days ahead, trade for at least ten business days and cannot be pledged or margined (Articles 7 to 9).

Chapter II covers the prospectus: no offer before CMA approval, an Arabic prospectus with risk factors, use of proceeds and a governance report, a decision within 20 business days (silence is refusal), publication at least five business days before subscription, and allocation and refunds each within five business days (Articles 10 to 18). In a book-built IPO at least 20% goes to retail investors and at least 60% to qualified investors (Article 15). Article 19 requires a subscription receiving bank, financial adviser and listing adviser. Article 33 lets foreign companies offer up to 30% of their capital, and free zone companies (including financial free zone companies) offer 25% to 70% if they have paid-up capital of at least AED 20 million, two years of profits and a registrar cooperation agreement with the CMA.

Who it applies to

Public joint stock companies offering shares on incorporation, on conversion or by capital increase; foreign and free zone companies offering shares to the public in the UAE; subscription receiving banks, financial advisers, listing advisers and appraisers of in-kind contributions; and investors subscribing.

Contents

English official text in 52 articles. Open the full text or jump to a provision:

1. Article 1 — * * * * *
2. Article 2 — *
3. Article 3
4. Article 4 — Second: Companies Offering their Shares after conversion
5. Article 5 — Third: The Issuing Company's offering of shares to increase capital
6. Article 6 — Mechanisms for offering the shares related to the increase of capital
7. Article 7 — Announcement of a rights offering
8. Article 8 — Origination of Rights Issue
9. Article 9 — Listing and Trading of Rights Issue
10. Article 10
11. Article 11 — The Prospectus*
12. Article 12 — Disclosure of the Prospectus
13. Article 13 — Subscribers’ Complaints
14. Article 14 — Electronic Subscription
15. Article 15 — Subscription Based on Book building
16. Article 16
17. Article 17 — Pricing and Allocation as per Book Building Mechanism
18. Article 18 — Distribution of Shares to Subscribers
19. Article 19
20. Article 20 — Conditions of Licensing the Financial Advisor or Listing Advisor *
21. Article 21 — Application for Licensing
22. Article 22 — Duration and Renewal of License
23. Article 24 — *
24. Article 25 — *
25. Article 26 — Appraiser of In-kind contribution
26. Article 27 — Obligations of the In-kind Shares Appraiser*
27. Article 28 — I. Conversion of Cash Debts into Shares in the Company’s Capital
28. Article 29 — II. Conversion of Sukuk and Bonds issued by the Company into Shares
29. Article 30 — *
30. Article 30 bis — Conditions and Requirements for Issuing the Scheme *
31. Article 30 bis — 1
32. Article 30 bis — has been added according to Decision No. (22) of 2017
33. Article 30 bis — 1 has been added according to Decision No. (22) of 2017
34. Article 30 bis — (2)
35. Article 30 bis — (3)
36. Article 30 bis — 2 has been added according to Decision No. (22) of 2017
37. Article 30 bis — 3 has been added according to Decision No. (22) of 2017
38. Article 30 bis — 4
39. Article 30 bis — 4 has been added according to Decision No. (22) of 2017
40. Article 31 — IV. The Strategic Shareholders Participation
41. Article 32 — V. Incorporation of the Reserves into the Capital
42. Article 33 — Conditions of Approval of the Offering * * * * *
43. Article 34
44. Article 35 — Request for Data and Information
45. Article 36 — Complaints
46. Article 37 — Administrative Measures
47. Article 38
48. Article 39 — Disclosure of the names of the violators
49. Article 40
50. Article 41
51. Article 42
52. Article 43 — Entry into Force of the Regulations

Key provisions

Obligations and deadlines

• Obtain CMA approval of the prospectus before any offer of shares to the public (Article 11).
• Publish the prospectus at least five business days before subscription opens, 15 days for a capital increase (Article 12).
• Deal with subscribers' complaints within five business days (Article 13).
• Allocate shares within five business days of closing and refund excess within five business days of allocation (Article 18).
• Appraisers of in-kind contributions must not trade the shares from 15 days before to 5 days after their report (Article 27).

Penalties

Article 38 applies the penalties in the capital market law and the CMA's settlement procedures. Licensed parties may be warned, suspended for up to one year or have their licence cancelled; their employees may be warned, suspended for up to two months or lose accreditation. Under Article 37 the CMA may suspend an issuance, offering or subscription, cancel subscriptions and order refunds with interest, and cancel an appraiser's approval or bar it for up to three years. Violators' names may be published (Article 39), and decisions can be appealed within 30 days (Article 40).

History and citations

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