Key amendments


The Securities Exchange of the Dubai International Financial Centre, NASDAQ Dubai, recently issued a consultation paper (1/2011) to facilitate public discussion regarding proposed changes to its Listing Rules. The proposed changes relate to both the framework and content of the Listing Rules, which have been in place since September 2005.

The amendments are designed to increase participation by individual investors (both institutional and retail) in initial public offerings (IPOs) and to create a new and more flexible regulatory regime. The amendments are aimed at further attracting family companies as well as small and medium-sized enterprises, with a view to creating new investment opportunities.

NASDAQ Dubai has continued to promote an open dialogue with its market participants and has developed working groups with those participants through the course of the past two years to ensure that sufficient feedback had been received before seeking comment on the proposed changes.

Key amendments

A new listing rule has been introduced that requires entities issuing equity securities to issue and file a prospectus with the Dubai Financial Services Authority.

A provision has also been included requiring the demonstratation of a 'genuine investor interest'. Issuers are now required to demonstrate a minimum of 400 security holders or otherwise have a 'retail set aside' of at least 10%. The free float minimum of 25% from the existing rules has also been retained.

Qualification for listing may be achieved under any of the following four tests:

  • the $50 million market capitalisation test;
  • the $20 million market capitalisation test;
  • the profits test; and
  • the assets test.

The new rules retain the existing $50 million market capitalisation test, with a new $20 million test included. This new test imposes a 12-month 'lock-in' period for pre-IPO shareholders. The profits test requires issuers to have generated a profit for each of the previous three financial years, including the immediately proceeding 12-month period. The entity must also have conducted the same business activity during that period. The additional assets test is designed for those entities that do not have a three-year financial record, but meet certain assets and working capital tests. Again, NASDAQ Dubai may impose a 12-month lock-in period for pre-IPO shareholders and possibly cash-flow reporting requirements for entities wishing to list under this test.

All issuers of equity securities will be required to disclose their financial information on a quarterly basis to ensure a greater degree of transparency.

In addition to having the power to request suspension of their securities, listed entities will have the ability to request that NASDAQ Dubai impose a trading halt for a period of up to two business days.

One key change is the inclusion of detailed guidance notes for market participants that clarify how NASDAQ Dubai interprets certain listing rules and the methodology to be applied to ensure compliance. Inclusion of the guidance notes is proposed to be inserted only as a non-binding section of the Listing Rules.

A different framework for meeting continuous disclosure obligations is proposed, with new provisions included to provide greater clarity regarding ongoing obligations dealing with:

  • sufficiency of operations;
  • free float;
  • communication and compliance;
  • financial condition;
  • genuine investor interest;
  • proportion of assets in cash; and
  • corporate governance.

NASDAQ Dubai has also stated that it will maintain close contact with all listed entities in relation to their compliance with these ongoing obligations. Under proposed Listing Rule 4.13, an issuer of securities may not disclose documents such as a notice of meeting, an amended constitutional document or any proposed amended document setting out the terms of any debt securities until NASDAQ Dubai has reviewed the documents and advised that disclosure to shareholders can proceed.

The consultation paper also suggests that NASDAQ Dubai will include two key changes relating to the introduction of rules for the mining sector. These key changes include:

  • the introduction of specific rules relevant to the oil and natural gas industry; and
  • rules specifically for those mining entities (other than oil and natural gas entities) that are in compliance with the requirements of any of the following:
    • National Instrument 43-101 (Standards of Disclosure for Mineral Projects) of Canada;
    • the South African Code for the Reporting of Mineral Resources and Mineral Reserves; or
    • the Joint Ore Reserves Committee Code of Australia.

Entities from other jurisdictions that are in compliance with these requirements may be admitted to the official list of NASDAQ Dubai.


It is hoped that these changes will provide a more competitive and liquid capital market, based on internationally recognised rules and regulations. It is also a clear mandate of NASDAQ Dubai that the enforcement of these amended Listing Rules be conducted in a fair and transparent manner, which will in turn provide and promote a greater volume of capital raisings for the region.

For further information on this topic please contact Hasan Rizvi or Ben Constance at Taylor Wessing (Middle East) LLP by telephone (+9714 309 1000), fax (+9714 358 7732) or email ([email protected] or [email protected]).