Authority’s Board of Directors’ Resolution No. (02/R) of 2014 Concerning the Regulations on Covered Warrants

§Preamble

The Authority’s Board of Directors’ Decision No. (2) of 2014 Concerning the Regulations on Covered

Warrants

The Chairman of the Board of Directors of the Securities and Commodities Authority,

Having considered the Federal Law No (8) of 1984 concerning Commercial Companies, as amended;

The Federal Law No (4) of 2000 concerning the Emirates Securities and Commodities Authority and Market, as amended;

The Federal Decree No (32) of 2013 concerning the Composition of the Council of Ministers of the United Arab Emirates;

The Council of Ministers’ Resolution No (12) of 2000 concerning the Regulation for Listing Securities and Commodities;

The Council of Ministers’ Resolution No (108/7 and /5) of 2010 concerning the Restructuring of the Board of Directors of the Securities and Commodities Authority;

The Authority's Board of Directors’ Decision No (3) of 2000 concerning the Regulation for Disclosure and Transparency, as amended;

The Authority's Board of Directors’ Decision No (2) of 2001 concerning the Regulation for Trade, Clearing, Settlement, Transfer of Ownership and Safekeeping of Securities, as amended;

The Authority's Board of Directors’ Decision No (3) of 2001 concerning the Internal By-Law of the Market, as amended;

The Authority's Board of Directors’ Decision No (29/r) of 2009 concerning the Regulation of Securities Custody Activities; and

Based on the approval of the Board of Directors at its Twenty-First Meeting of the Fourth term convened on 26/12/2013,

And after consultation and coordination with the Markets,

Has decided:

Definitions

Article (1)

For the implementation of the provisions of this Regulation, the following words and expressions shall have the meanings assigned thereto hereunder, unless the context indicates otherwise:

State:

United Arab Emirates.

Authority :

The Securities and Commodities Authority.

Market:

A securities and commodities market licensed in the State by the Authority.

Central Bank:

Central Bank of the United Arab Emirates.

Covered Warrants: Tradable securities of equal value that give their holders the right, without obligation, to buy or sell a specific number of Underlying Assets at a specified price within a specific period.

Warrant Owner:

The natural or legal person who owns the Covered Warrant.

Covered warrants issuer*

: Authorized party by the Authority to issue Covered Warrants .

Warrant Price:

The price determined by the Issuer in the prospectus for the Covered Warrant.

Underlying Assets:

Shares, indexes or any other financial instrument approved by the Authority.

Conversion Ratio:

The number of Covered Warrants against one unit of Underlying Assets or vice versa.

Execution Price:

Purchase or sale price of Underlying Assets covered by the warrant and that is defined previously in the prospectus which allows the owner to exercise the right thus given thereto.

Settlement Price:

The price based on which the settlement is made, which represents either the average closing prices for Underlying Assets over a period of 5 days before settlement or the expiration of the right immediately, or the closing price of Underlying Assets in the last day prior to the settlement or the expiration of the right immediately or any other way defined by the Market, in accordance with the provisions of the prospectus.

Shares:

Shares listed on any of the securities markets licensed in the State by the Authority or listed - as premium listing - on one of the State financial free zones markets or foreign markets under the control of a supervisory entity which carries out similar functions as those of the Authority.

* Definition (Issuer) has been amended according to The Chairman of the Authority’s Board of Directors’

Decision No. (13/Chairman) of 2021 on the Regulations Manual of the Financial Activities and Status Regularization Mechanisms.

indexes:

Indexes of Markets licensed in the State by the Authority or the financial free zones markets in the State or foreign markets under the control of a supervisory entity which carries out similar functions as those of the Authority.

Licensing of the Issuer

Article (2) *

Licensing Conditions

Article (3)

Application for License

Article (4)

License Duration

Article (5)

Obligations of the Issuer

Article (6)

Issuer’s Disclosure Requirements

Article (7)

Events of Approval on the Issuance of Covered Warrants

§Article 8

The Authority grants its approval to issue Covered Warrants in any of the following events:

1. The Issuer must comply with the financial solvency criteria to such an extent that covers the value of the issuance for which approval is required.

2. Submit a proof that the issuance is guaranteed by another entity, bank or financial institution that satisfy the financial solvency requirements.

* Articles (2) to (7) has been cancelled according to The Chairman of the Authority’s Board of Directors’

Decision No. (13/Chairman) of 2021 on the Regulations Manual of the Financial Activities and Status Regularization Mechanisms

3. Deposit Underlying Assets - as the case may be - on which the Issuer wishes to issue Covered Warrants at the clearing house in the Market or with an independent custodian licensed by the Authority. Such Underlying Assets may not be sold, pledged or transferred or disposed of during the whole validity period of warrants or until the date of right execution thereon.

Covered Warrants Issuance and Listing

§Article 9

The following is required to approve the issuance and listing of Covered Warrants:

1. Submit an application to issue and list Covered Warrants on the prescribed form together with the supporting documents for every issuance issued by the Issuer, and in particular:

a. A prospectus, provided that it includes all the necessary conditions and statements including the warrant’s price, type (sale/purchase), Execution Price, Conversion Rate, settlement method (in cash/in kind), calculation method of Settlement Price, index point price if the warrants were issued on an index, warrant expiration date, and the minimum allocation, if any.

b. The number of Covered Warrants which the Issuer wishes to issue, provided that they are not less than one million warrants against at least one million units of assets the subject of contracting.

2. The Issuer must be responsible for pricing all Covered Warrants and shall conduct the duties of a market maker or appoint a market maker in accordance with the applicable regulations in this regard.

3. The Shares on which Covered Warrants are issued must be listed for trading in the Market and convertible without any restrictions, and have enough liquidity based on the controls defined by the Markets.

4. The number of Covered Warrants to be issued in addition to Covered Warrants which have already been issued and still exist must not exceed (50%) of the total Shares issued by the company if the Warrants are issued on Shares.

5. The existence of a disclosure mechanism -for the Authority and the Market- relating to ownership of Covered Warrants in the events where ownership of Shares on which those Warrants were issued must be disclosed.

6. Payment of fees specified by the Authority.

§Article 10

Subject to the Market’s circumstances and public interest, the Authority shall issue, within thirty days from the date of submitting the complete application, its decision to approve the issuance and listing of Covered Warrants provided that the application satisfies the conditions and requirements prescribed in this Regulation.

Covered Issuance Listing and Trade

§Article 11

1. The listing application of Covered Warrants on a Market must be submitted together with required documents and statements in accordance with the internal procedures applicable at the relevant Market.

2. The limits (upper or lower) on the range of movement in the price over one day, stated in the Regulation for Trading, Clearing, Settlement, Transfer of Ownership and Safekeeping of Securities or at the Market, shall not be applied on the trading of Covered Warrants.

3. Without prejudice to the provisions of this Regulation, the Regulation for Trading, Clearing, Settlement, Transfer of Ownership and Safekeeping of Securities shall apply on the trading of Covered Warrants.

4. The Authority may suspend the listing of Covered Warrants if the listing of Underlying Asset has been suspended.

Covered Warrants Settlement

§Article 12

1. The settlement is made upon the use by the Warrant Owner of the option granted thereto, whether in cash or in kind in accordance with settlement method defined in the prospectus.

2. The settlement in kind is made on delivery of Underlying Assets -as per the case- to the Warrant Owner based on the Conversion Rate, the agreed execution price and through settlement regulations applicable in the Market.

3. The settlement in cash is made by paying the difference between the Execution Price and the Settlement Price to the Warrant Owner.

4. The settlement shall always be made in cash in the following events:

a. If the Covered Warrants were issued on an index.

b. If the Covered Warrants were issued on key assets issued outside the State or in a financial free zone inside the State.

c. If the settlement in kind affects the ownership percentage of the nationals stated in the Commercial Companies Law or in the company’s articles of association.

5. The Covered Warrant Owner may not recover its value in any case.

Market Regulations and Procedures

§Article 13

The Market – upon the Authority approval - shall set the following regulations and procedures:

1. Internal procedures and controls necessary to implement this Regulation.

2. Technical controls relating to the market maker for Covered Warrants.

3. Covered Warrants listing fees and trade commissions, and the share of each of the Authority and the Market thereof.

Violations and Sanctions

§Article 14

First: In the event that the applicable laws, regulations this Regulation or the prospectus are breached, the Authority may impose one of the following sanctions:

1. A warning.

2. A fine of no more than the maximum limit prescribed in the Law and the regulations issued pursuant therefore.

3. Prevent the Issuer from the approval of any new issuance.

4. Revoke the Issuer’s license.

Second: The decision to revoke the license of an Issuer shall be published in two daily newspapers issued in the State with at least one in the Arabic Language at the Issuer’s expense.

Third: In the event that the Issuer’s license is revoked, dealing with current legal positions remains valid until they are settled in accordance with the controls defined by the Authority.

§Article 15

This Decision shall be published in the Official Gazette and shall come into effect from the next day to the date of its publication.

Engineer / Sultan Bin Saeed Al Mansouri Chairman of the Board of Directors

Issued in Abu Dhabi on: 13/1/2014