CMA Decision No. 5/R of 2020 · UAE Federal
Board decision on suitability and appropriateness standards for licensed firms, repealed by the Regulations Manual of the Financial Activities issued by Decision No. 13/Chairman of 2021.
Decision No. 05 of 2020 required every entity licensed by the Securities and Commodities Authority to test whether a product or recommendation suited the client before dealing with a retail investor. Issued in Abu Dhabi on 2 February 2020 under Federal Law No. 4 of 2000, it took effect 30 days after publication in the Official Gazette (Article 10); Decision No. 9 of 2020, published on 31 March 2020, modified the corporate limb of the qualified investor definition. The CMA lists it as repealed by the Regulations Manual of the Financial Activities issued by Decision No. 13/Chairman of 2021, which now carries suitability and appropriateness standards for licensed bodies.
Article 1 excluded qualified investors from the standards: government bodies, regulated entities, companies meeting two of AED 75 million assets, AED 150 million revenue or AED 7 million equity, and individuals with AED 4 million net equity excluding the main home and AED 1 million annual income who declare adequate experience. Article 2 applied the decision to all Authority-licensed entities.
Article 3 required a firm recommending or executing a complex financial product to assess the client's experience, financial position, capacity to bear losses and investment objectives, and Article 4 to record this in a suitability report. Article 5 required the firm to decline where information was insufficient, tell the client whether the product was suitable, follow documented instructions if the client insisted, obtain an annual undertaking and refresh the report every three years. Articles 6 to 8 imposed a lighter appropriateness test and report where the firm only executed non-complex orders without advice. Article 9 applied the Authority's general penalties.
All entities licensed by the Securities and Commodities Authority that recommended or executed transactions in financial products for clients other than qualified investors, between March 2020 and the 2021 repeal.
English official text in 10 articles. Open the full text or jump to a provision:
| Article 1 | Defines qualified investor: government bodies, regulated entities, companies meeting two of AED 75 million assets, AED 150 million revenue or AED 7 million equity, and individuals with AED 4 million net equity and AED 1 million income. |
| Article 3 | Before recommending or executing a complex financial product, the firm must assess the client's experience, education, income, assets, obligations, capacity to bear losses and investment objectives. |
| Article 4 | The firm must prepare a suitability report recording the assessment, the tools used, the recommendation and the reasons the product is or is not suitable, and update it periodically. |
| Article 5 | Firm must decline without sufficient information, notify suitability, follow and document a client's insistence, take an annual undertaking, update the report every three years and produce reports to the Authority on request. |
| Article 6 | Where the firm only executes non-complex transactions without advice, it applies appropriateness standards: the client's knowledge, transaction history, education and profession, and the fit of the products and markets. |
| Article 8 | Appropriateness duties: inform the client, notify appropriateness, decline without sufficient information, document a client's insistence, retain reports and update internal procedures. |
Article 9 applied the penalties in the Authority's other decisions to breaches; the decision set no fines of its own.
Clients sometimes ask why a UAE bank or broker sends them lengthy questionnaires before allowing them to buy structured products, or offers to classify their holding company as a qualified investor. This decision, and the suitability and appropriateness rules in the CMA rulebook that replaced it, are the reason. Polaris is not licensed by the CMA and does not advise on or sell financial products. For holding companies and family vehicles we administer, we prepare the corporate documents, audited accounts and board resolutions a licensed firm asks for when classifying the entity, and keep its UBO and AML records consistent with what was declared.
| Repealed by | CMA Decision No. 13/Chairman of 2021 |
| Cites | Former SCA Law |
“Cites” and “Cited by” are built automatically from references in the full texts held in this library; they cover only instruments in the library.
Regulations Manual of the Financial Activities (Rulebook)
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Qualified Investor Definition Amendment
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Definition of Qualified Investor
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Former Promotion and Introduction Regulation
Chairman decision organising the promotion and introduction of financial products, now listed by the CMA among superseded regulations.
Former Investment Management Regulation
Board regulation on investment management, repealed by the Regulations Manual of the Financial Activities issued by Decision No. 13/Chairman of 2021.
Former SCA Law
Former federal law establishing the Emirates Securities and Commodities Authority and Market and regulating licensing, listing, trading and disclosure in the securities m…
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