MIDDLE EAST FINANCIAL SERVICES BRIEFING
A round-up of key legal and regulatory developments in
FEBRUARY 2020
Dubai
the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman for informed business strategy in 2020
Also see our global Financial Services Regulatory (FSR) team's recent briefing here which gives a global outlook on major themes expected to be at the forefront of regulatory priorities over the next 12 months.
1. Middle East Outlook for 2020
Table of contents
1. Middle East Outlook for 2020
2. Developments in Insolvency and Bankruptcy Regimes
3. Anti-Money Laundering Regulation
4. Foreign Investment Regulation
5. Tax Regulations and Reporting Requirements
6. Competition Regulation
7. Encouraging Financial Innovation and Financial Inclusion
8. Consumer Protection
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Brexit: As the UK's exit from the EU becomes a reality, the financial services passporting considerations for UK Global financial services firms that have branches in the Middle East, and their European headquarters in the UK, increase in prominence. Any restructuring arrangements necessitated by the UK leaving the EU without a form of market access to the European Economic Area will need to be scrutinised before the end of the transition period (31 December 2020) to determine any regulatory impact in the Middle East region. This includes considering key issues such as notification requirements, consent and local licensing conditions.
9. Whistleblowing 10. Compliance and Suitability
Assessments 11. Corporate Governance
Related links
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The Reform of Global Interest Rates: Following the shortcomings cited in recent years of interbank offered rates (IBORs) such as LIBOR, the development and adoption of alternative riskfree rates (RFRs) has been advocated by regulators around the world. The global reform of interest rates is one of the most complex financial reforms undertaken and regulators are focusing on the need for market participants to transition to RFRs based on liquid, deep and active overnight markets.
FinTech and Financial Inclusion: We anticipate ongoing engagement with regulators in Bahrain, Saudi Arabia and the UAE to establish and regulate cryptocurrencies. Saudi Arabia and the UAE
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have announced plans early in 2019 to launch "Aber", a new cryptocurrency, and the Central Bank in Bahrain has issued new cryptocurrency regulations setting out rules in the governance, licensing and risk management of cryptocurrencies as a separate asset class.
Foreign Investment Regulations: We expect regulators to continue to introduce a range of measures and initiatives to bolster the attractiveness of the Middle East region for foreign investment. Oman, for example, has introduced a plethora of new regimes in 2019 in bankruptcy law, foreign investment law, privatisation projects and public private partnerships (PPP), all focused on improving the attractiveness of the investment environment in Oman. The UAE has also opened up more than 100 commercial activities across a range of sectors to 100 per cent foreign ownership following a resolution issued by the Cabinet of the UAE in July 2019.
Increased Collaboration Between Middle East Agencies: Regulators in the region are taking increased steps to combine resources, intelligence and data to combat anti-money laundering and counter-terrorist financing.
Suitability and Protection of Client Assets: Firms will need to address and assess the suitability of products and services for their clients and ensure that they have put in place proper safeguards for client assets.
2. Developments in Insolvency and Bankruptcy Regimes
In line with international regulatory developments, Middle East regulators are now placing increased emphasis on creating an effective framework to facilitate the rescue of financially troubled businesses. A new insolvency regime for the Dubai International Financial Centre (DIFC) was enacted in June 2019, serving to modernise the restructuring and insolvency regime and integrate aspects of the UNCITRAL 1997 Model Law on Cross-Border Insolvency. Two new procedures (rehabilitation and administration) now accompany the existing voluntary arrangements of receivership and winding-up procedures. The UAE has also issued a new personal insolvency law which essentially provides UAE nationals and residents with new bankruptcy procedures to assist those in financial difficulty. Minor changes have also been made to the UAE Bankruptcy Law (Federal Decree-Law No.9 of 2016) by Federal Decree-Law No.23 of 2019. Revisions include provisions allowing the debtor or the creditor to specify in its bankruptcy application whether it is for restructuring purposes or for bankruptcy and liquidation, and the possibility to appoint "another expert" instead of an insolvency practitioner registered on the UAE's Experts' Panel.
Oman has introduced a stand-alone bankruptcy regime for the first time. Omani Royal Decree No.53 of 2019 modernises and streamlines the previous regime, making reorganisation and composition rescue procedures available to debtors experiencing financial difficulties. The new procedures will be available from July 2020.
In the Kingdom of Saudi Arabia, similar attempts to modernise bankruptcy regulations and simplify difficulties faced by struggling companies seeking to restructure debt with creditors are being tested in the courts. In addition, new rules regulating bankruptcy procedures under the Bankruptcy Law (Royal Decree No.M/05 dated 28/05/1439H (13 February 2018)) have been approved by the Saudi Arabian Justice Minister and President of the Supreme Judicial Council. Resolving insolvencies has been a key area of improvement in the country, which has ascended 30 places to 62 in the World Bank Report. We anticipate regulators to make further advances in 2020 as the bankruptcy law and other reforms are formally introduced, along with planned amendments to licensing regimes.
3. Anti-Money Laundering Regulation
Financial services regulators in the region continue to be concerned about failures by licensees to implement anti-money laundering (AML) or counter terrorist financing (CFT) policies, procedures, systems and controls, sanctions compliance and failings in client on-boarding processes; particularly in the light of identified weaknesses in documentation relating to source of wealth and unexplained complex legal structures. The MoU signed between the UAE Financial Intelligence Unit (FIU) and the Saudi Arabia Financial Intelligence Unit in August 2019 is one example of the Middle East's commitment to combatting money laundering and financial terrorism through the fostering of closer working practices and increased collaboration. Another is
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the FIU's introduction of a new AML reporting platform (goAML) in June 2019 to help identify illicit transactions more effectively by aiding in the reporting and investigation of Suspicious Transaction Reports (STRs). In light of these developments, authorised firms need to ensure that their AML/CFT policies and procedures are robust and able to meet the challenges of their ongoing business while ensuring legal and regulatory compliance.
Saudi Arabia and the UAE have also either recently received or are awaiting their Financial Action Task Force (FATF) Mutual Evaluation Assessment Report. The DFSA has already presented amendments to the Regulatory Law and the AML module in advance of the UAE's assessment in July last year, which introduce a prohibition from conducting Designated Non-Financial Businesses or Professions (DNFBPs) activities in or from the DIFC (unless registered with the DFSA), and a requirement to identify the money laundering reporting officer, senior management and beneficial owners. The suite of changes proposed seek to bolster an approach to customer due diligence that brings the module into greater alignment with FATF Recommendations.
Qatar, Oman and Kuwait are currently preparing for their own FATF Mutual Evaluation Assessments in June/July 2020, June/July 2021, and October/November 2021 respectively.
4. Foreign Investment Regulation
Following the Middle East's growing need to diversify their economies away from limited and/or volatile oil resources, we expect regulators to continue to introduce a range of measures to bolster the attractiveness of the Middle East region for foreign direct investment. It has become increasingly common across many jurisdictions in the Middle East for regulators to ease restrictions on the level of foreign ownership of local companies:
A new resolution issued by the Cabinet of the UAE in July 2019 (updating the UAE Federal Law No.19 of 2018 regarding foreign direct investment) opened up more than 100 commercial activities across a range of sectors to 100 per cent foreign ownership. The framework allows greater investment by foreigners into the share capital of local companies incorporated "onshore" in the UAE and which operate in certain sectors on the "Positive List" (subject to licensing requirements). The three relevant sectors affected on the Positive List broadly cover agriculture, manufacturing and services, with 122 economic activities.
On 11 March 2019 the UAE Securities and Commodities Authority (SCA) (which regulates financial markets onshore in the UAE), the Financial Services Regulatory Authority (FSRA) in the ADGM and the Dubai Financial Services Authority (DFSA) in the DIFC launched passporting legislation and rules enabling UAE wide promotion of investment funds. These new passporting rules and legislative instruments arose as a result of an extensive consultation following the signing of the Passporting Agreement by the three regulators and encourages the growth of investment funds, greater collaboration between market leaders and enhanced levels of foreign investment into the jurisdiction.
The UAE SCA has also floated the possibility of onshore listing for UAE free zone companies in its proposed amendments to SCA Resolution No.11/R.M of 2016 Concerning the Regulation of the Offering and Issuance of Stocks of the Public Joint Stock Companies. The amendments would allow a public limited company incorporated in a free zone to offer its shares onshore in the UAE, with SCA approval, subject to the following conditions being met:
o The company must have fully paid-up share capital of not less than AED 20 million;
o The company must have audited financial statements for two financial years;
o The company must provide a no-objection certificate from the regulatory body in the relevant free zone;
o The company must meet all onshore listing requirements;
o The shares offered cannot be less than 30 per cent and not more than 70 per cent of the company's issued share capital; and
o The offer of shares must be limited to "Qualified Investors" only; the definition of "Qualified Investor" being recently amended by the SCA Chairman's "Decision No. 3/R.M. of 2017
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Concerning Promoting and Introducing" to include a natural person that is accredited by the SCA (or similar regulatory authority) to engage in financial activities or services.
The SCA has not yet confirmed the timescale in which the proposed amendments will be adopted.
Similarly, Abu Dhabi introduced two new laws designed to promote the flow of foreign direct investment into the capital of the UAE. Abu Dhabi Law No.1 of 2019 established the Abu Dhabi Investment Office (ADIO) and entrusted the body with supervising the implementation and execution of strategy for increasing investment into the Emirate. The Abu Dhabi Law No.2 of 2019 provided a framework for regulating partnerships between the public and private sector (PPP), whilst supporting private sector participation in strategic sectors such as urban infrastructure, technology and transportation.
Dubai's Free Zones Council is considering launching a feasibility study into setting up a Gaming Free Zone, and reviewed progress on the Free Zone Window e-initiative which is likely to be launched in the third quarter of 2020. The initiative aims to help investors identify the most suitable free zone according to their needs.
The trend to attract greater levels of foreign investment also extends to Oman. A new law to promote foreign investment, issued under Royal Decree No.50 of 2019, came into force on 2 January 2020. Similar to UAE Federal Law No.19 of 2018 and its accompanying resolution, secondary legislation is expected in Oman specifying which activities engaged in by local companies are eligible for foreign investment. There is currently no upper threshold set on foreign investment under the law, suggesting foreign investors may own up to 100 per cent of the domestically incorporated company, with the approval of the Ministry of Commerce and Industry. Further, we expect companies in receipt of foreign direct investment to be treated the same as locally owned companies, giving them access to project real estate under long-term leases, tax incentives and certain protections from expropriation. There may also be additional benefits provided to foreign investment projects in less developed areas in the country. That said, a potential foreign investor in an Omani company will need to first apply for a licence and register with the Ministry of Commerce and Industry.
The Kingdom of Saudi Arabia has announced plans to open up its exchange, Tadawul, to foreign strategic investors and foreign issuers. Not only will foreign strategic investors be able to win a controlling stake in Saudi Arabian companies listed on the Tadawul (subject to conditions stated in new rules by the CMA) but foreign issuers can list their shares on the Tadawul from January 2020, pursuant to amendments to the CMA's Rules on the Offer of Securities and Continuing Obligations.
Kuwait has been ear marked as a more attractive destination for investment after being granted merging Market status on the MSCI Indices from May 2020 following confirmation that Kuwait's equity market rules meets all necessary requirements.
5. Tax Regulations and Reporting Requirements
In the Middle East region we expect regulatory updates on tax to be progressive and measured; particularly following the UAE's earlier inclusion on the European Union's blacklist of countries alleged to be tax havens and its subsequent removal in October 2019 after officials reaffirmed the UAE's long standing commitment to meeting the highest international standards on taxation. Oman however still remains on the blacklist:
As part of the UAE's commitment to OECD taxation requirements, and retain its excellent reputation for ease of doing business, the country introduced on 30 April 2019 new UAE economic substance rules. Businesses in the UAE who are engaged in certain activities in the UAE, or off shore in a freezone, are required to submit an annual report demonstrating that its substantive operations are in the UAE (ie. that the business generates its primary income from activities in the UAE, it is managed in the jurisdiction and has employees, expenditure and business premises in the jurisdiction). The law is largely understood to prevent non-domiciled directors who register and operate companies locally from evading tax in their home nations.
UAE Cabinet Resolution No.32 of 2019 now requires a UAE company or branch that is part of a multinational corporate group to file a tax report, save for where another group company is required to file the same information under the laws of another country which shares tax information with the UAE.
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Oman introduced a new excise tax in June 2019 in accordance with the Unified GCC Excise Tax Agreement and Royal Decree No.23 of 2019. The tax applies to energy drinks, carbonated drinks, tobacco and tobacco derivatives, pork products and alcohol.
Kuwait has postponed the implementation of value-added tax (VAT) implementation to 2021, modifying its terms to the Unified GCC Agreement for Value Added Tax.
6. Competition Regulation
The first quarter of 2019 saw Saudi Arabia announce the coming into force of a new competition regime on 25 September 2019, with the adoption of Royal Decree No. (M/75) of 1440H on 6 March 2019. We expect the modernised regime to enhance the conditions for inward investment into the Kingdom whilst supporting the broader economic goals of Saudi Vision 2030. The new law regulates anti-competitive agreements, abuse of a dominant position and "economic concentration" (such as a merger or an acquisition). Key points to note include:
The regime's wide application to "establishments", which includes economic activities carried out by any person or company in Saudi Arabia, or economic activities practiced outside the Kingdom that have an adverse effect on fair competition within the Kingdom. This provision captures foreign entities who may be reliant on ensuring continued access to Saudi markets. However, Government entities and state-owned companies are excluded from the application of the law.
In regard to anti-competitive agreements, the new law lists a number of specifically prohibited arrangements between establishments which have as their object or effect the violation, reduction or prevention of competition. These include price-fixing, setting conditions for sale, collusive bids or tendering (except for joint bids disclosed in advanced), agreements to limit output, the allocation of markets based on customers, time periods or areas and collective boycotts of customers or suppliers.
Where a proposed "economic concentration" may affect competition in a relevant market, implementing regulations require notification to the General Authority for Competition (GAC) if the total combined turnover of the participating entities to the economic concentration is SAR 100 million (USD 26.6 Million) or more, and prior clearance in advance of completion. The notification must be made within 90 days (increased from 60 days under the previous regime) prior to the completion date. We expect the broad language of the implementing regulations, and the low turnover threshold, to lead to an immediate increase in the transactions filed for approval with GAC.
The extraterritorial reach of the new competition law is potentially broad. As the implementing regulation does not explicitly limit the combined turnover calculation of the participating parties to turnover generated inside the Kingdom, any company that generates more than USD 26.2 million, including foreign parties with no assets in the Kingdom, could potentially be required to notify the GAC of proposed transactions anywhere in the world.
In regard to abuse of a dominant position, the new law sets out a range of prohibited abusive activities or activities that lead to the reduction or prevention of competition. Implementing regulations state that an establishment is deemed to have a dominant position if its share of the relevant market is 40 per cent or more, or it has the ability to influence the market (such as through controlling prices, production, or demand).
The new law and implementing regulations grant GAC the authority to enter business premises to investigate activities and, in doing so, seize company files, documents, data, computers and other equipment, including confidential materials. The GAC also reserves the right to initiate criminal proceedings and punish violations by imposing potentially large fines. For example, engaging in prohibited anti-competitive conduct, or closing a transaction without prior approval may subject an entity to fines of up to 10 per cent of the value of sales at issue. However, exemptions from provisions of the law do exist, specifically where practice will increase the performance of the market or establishments, and it is beneficial for consumers. A new committee is expected to be formed to settle disputes and enforce penalties under the new regime.
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7. Encouraging Financial Innovation and Financial Inclusion
Middle East regulators continue to seek to address the opportunities and challenges posed by the development of financial technology (FinTech), including how it might be used as a tool to facilitate and promote financial inclusion and the enhancement of efficiency of markets. Regulators across the region are trying to find a balance between engaging with market participants in a facilitative and engaging manner (taking a risk based approach) while recognising that the full implications of FinTech innovation in cryptocurrency, for example, require close monitoring in order to protect consumers. As members of the International Organization of Securities Commissions (IOSCO), regulators in the region have also agreed to cooperate in developing internationally recognised and consistent standards of regulation, oversight and enforcement, and to enhance information exchange relating to crypto asset trading platforms, following a recent IOSCO report in May 2019. We anticipate that regulators will continue to engage with peer regulators, market participants, licensees and services providers to ensure that the correct environment exists to facilitate such innovation while ensuring appropriate protections are in place for customers and other market participants. With this in mind, we have seen:
The Saudi Arabian Monetary Authority (SAMA) release its Regulatory Sandbox Framework in the first quarter of 2019 to understand and assess the impact of new technologies in the financial services market in the Kingdom, following in the footsteps of the DIFC, the DFSA, the ADGM, the FSRA, UAE's Emirates Securities and Commodities Authority (ESCA), the Kuwait Central Bank (KCB), Central Bank of Bahrain (CBB) and Saudi Arabian Capital Markets Authority (Saudi CMA). Services and products tested include E-wallet services, P2P transfers and purchases through QR Codes, as well as direct international transfers through financial technology companies, and aggregators of point of sale (POS) devices, SADAD bills, SADAD account and mada online;
The UAE Central Bank set out plans to establish a new Fintech Office with the objective of supporting FinTech activities in the banking sector whilst assisting in the establishment of UAE approved regulatory framework in co-operation with other FinTech authorities in the UAE, DIFC and ADGM. The SCA is also an official member of the Global Financial Innovation Network (GFIN), a body of international regulators and organisations with the shared objective of supporting international financial innovation for consumers in the field of FinTech;
The FSRA become the first regulator in the region to introduce guidance on digital securities. The Guidance for Digital Securities Activity in the ADGM sets out the FSRA's approach to regulating digital securities in the ADGM for both primary and secondary markets, including in relation to listings, offers, market infrastructure and exchanges. The guidance supplements its framework regulating crypto asset activities launched in 2018 (as set out in the Financial Services and Markets Regulations 2015 and the FSRA's Rulebook) and the FSRA's Guidance on Initial Coin/Token Offerings released in October 2017;
The SCA propose a central clearing system in the UAE which unifies the UAE's two exchanges, the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX), to save costs, drive efficiency gains and satisfy global standards to qualify the UAE as a "developed market";
Saudi Arabia and the UAE announce plans to launch a new shared cryptocurrency called "Aber". Although there is currently no date set for its launch the use of the new cryptocurrency is expected to be restricted to their Central Banks, and a small number of banks in UAE and the Kingdom. The collaboration is intended to facilitate blockchain-powered financial settlements between financial institutions and forms part of a broad set of programs and initiatives of the Saudi-Emirati Coordination Council across various sectors; and
The Central Bank of Bahrain issue its first licence to a cryptocurrency exchange. Rain, a Bahrainbased cryptocurrency exchange platform and custodian, was awarded a Crypto-Asset Module (CRA) licence in July 2019, following its participation in the regulatory sandbox programme, and is the first cryptocurrency platform licensed to buy, sell, and store cryptocurrency in the Middle East. As a CBB licensed entity, the exchange is subject to the CBB's cryptocurrency regulations (which includes rules on governance, capital reserve requirements, cybersecurity requirements and risk management for cryptocurrencies as a new asset class).
On the other hand, the Qatar Financial Centre Regulatory Authority (QFCRA) announced in a tweet published on 26 December 2019 that authorised firms are not permitted to provide or facilitate the provision or exchange of crypto assets and related services in or from the Qatar Financial Centre (QFC) until further notice.
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8. Consumer Protection
Middle East regulators have continued to focus on consumer protection, introducing specific consumer protection focused provisions in the Kingdom of Saudi Arabia and UAE which increase transparency and enhance trust in online transactions and commercial insurance:
Saudi Arabia introduced a new e-commerce law (Royal Decree No. M/126 dated 07/11/1440H, 10 July 2019, effective on 24 October 2019) designed to safeguard consumers by regulating ecommerce service providers in the Kingdom, and providers located outside of the Kingdom who offer goods and services to customers inside the Kingdom. The law sets out minimum requirements for ecommerce websites, digital advertising and rights to terminate, as well as stipulating cooling-off periods and protections on the use and retention of personal data. We expect implementing regulations to be published shortly, along with the establishment of a committee to oversee the law and impose penalties.
Amendments to Regulation No.29 of 2011 regarding bank loans by way of Resolution No.96 of 2019 has introduced fee caps and other protections for retail customers in relation to various products. The UAE Central Bank now has the authority to supervise banks' fees and ensure rates are applied in a fair and appropriate manner.
The UAE Insurance Authority have set up new specialist committees to resolve retail and commercial insurance disputes in the UAE, specifically between insured persons (or beneficiaries and other interested parties) and insurers. Claimants are now able to file claims and submit documents more easily, including via email, with an expected resolution within 15 days. It is also available to the parties to resolve disputes by arbitration rather than by committee.
9. Whistleblowing
In keeping with the progressive steps taken by Saudi Arabia, the DIFC and Abu Dhabi in recent years, regulators across the region have issued new provisions aimed at protecting whistleblowers from unfair treatment. This includes Oman CMA's launch of a whistleblowing window (in January 2019) which aims to provide a 'swift system for reporting irregularities that might have harmful impact on the company so [that the] CMA can take timely remedial action', including reporting of illegal and unethical acts. The window acts as a conduit through which the whistleblower can report relevant information to the CMA, such as suspected violations and illegal activities or acts.
10. Compliance and Suitability Assessments
In previous years the DFSA have completed thematic reviews on client classification and suitability where concerns surrounding insufficient staff training and guidance, inadequate and unclear documentation to support assessments, and a lack of detailed qualitative assessments have been highlighted. The DFSA has now set out their proposed revisions to the rules on the suitability assessment of financial products for "professional clients" by DFSA authorised firms in Consultation Paper No.127 of 2019. As expected, the practices espoused in the paper strongly align with best practise adopted in EU jurisdictions based on the Markets in Financial Instruments Directive 2014 (MiFID II). The current full waiver of the suitability assessment for Professional Clients has been replaced, with preference shown to retaining the flexibility of partial waivers. The DFSA has also stated there should be extended guidance around warnings provided to professional clients to make sure they receive appropriate warning of the consequences that may result from the firm conducting a limited suitability assessment.
Further, the Central UAE Bank announced plans for UAE banks, and branches of foreign banks operating in the UAE, to enhance their reporting of non-performing loans (NPLs) due to the risk high levels of NPLs pose to the banking sector. Reforms are expected to align the UAE regulation of NPLs more closely with international best practices, in consultation with the International Monetary Fund. We expect the initiative to form part of a broader range of measures to reform the regulatory capital and supervisory framework for banks in the UAE, which ultimately bring the region in greater alignment with rules outlined by the Basel Committee on banking supervision and capital adequacy.
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11. Corporate Governance
An area of continued interest for regulators in the Middle East, new rules issued by the UAE SCA (specifically SCA Resolution No. (03/RM) of 2019 amending Resolution No.(7/RM) of 2016 concerning Standards of Institutional Discipline and Governance in Public Joint Stock Companies) have both streamlined and modernised corporate governance procedures for UAE public joint stock companies (PJSCs). Attending and voting electronically in general meetings is now permitted for shareholders of PJSCs (enabling swifter decision making), as is calling general meetings using text messages or emailing shareholders (in contrast to registered mail). Before taking advantage of these changes PJSCs must amend their Articles of Association and obtain consent from shareholders. The SCA has also provided for a grace period until the end of 2020 for companies to comply with the new Guide to Institutional Discipline Standards and Governance of Public Joint-Stock Companies. The guide sets out additional requirements for PJSCs to comply with, such as adopting practices which promote greater transparency on the disclosure of interests of board members, risk management procedures and the handling of conflicts of interest.
12. Company Law
Following the growing trend in the region for regulators to modernise systems and regulations governing industry and business, Oman's new Commercial Companies Law (effective from 1 April 2019) is no different. Enacted by Royal Decree No.18 of 2019, the new law repeals the previous Commercial Companies Law of 1974 and modernises the framework relating to PJSCs, listings of shares, bonds and Sukuk for Omani companies. We expect a range of complimentary initiatives to be introduced by Oman in 2020, diversifying the economy and bringing Oman closer to the realisation of its 2040 Vision. We also expect the ADGM to update the Companies Regulations 2015, the Beneficial Ownership Regulations 2018 and other regulations, following a consultation in December 2019. Key changes anticipated include the abolishment of the requirement to issue paper certificates and licenses in favour of electronically issued certificates (following the UK in replacing the name "Annual Returns" with "Confirmation Statement"), and aligning beneficial ownership rules more closely with Federal rules on AML.
Similarly, the Saudi Arabian CMA have announced plans to issue new Prudential Rules that ensure authorised persons maintain adequate capital requirements in a bid to protect investors and maintain stability in the financial markets. Areas regulated by the new rules include capital base requirements, minimum liquidity and capital requirements (comprising governance/oversight of liquidity risk, as well as Tier 1 and Tier 2 capital calculated pursuant to the rules), exposures, disclosure and notification requirements, and the obligation to have a prepared Internal Capital Adequacy Assessment Process (ICAAP).
Finally, the DIFC have issued new Prescribed Company Regulations under the Companies Law (DIFC Law No.5 of 2019) which consolidate and amend its predecessor, the Special Purpose Company (SPC) Regulations and the Intermediate Special Purpose Company (ISPC) Regulations. The Prescribed Company Regulations expand the previous ISPC and SPC regimes by allowing a greater range of persons to apply to establish a Prescribed Company (such as FinTech entities, DIFC private trust companies, authorised firms and funds regulated by the DFSA or other financial services regulator). The regulations also include both aviation structures and family holding structures as business activities in which a Prescribed Company can be established.
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13. Contacts
Stuart Paterson, Partner T +971 4 428 6308 M +971 50 625 6686 [email protected]
Elikem Dzikunu, Associate T +971 4 428 6307 M +971 54 792 6723 [email protected]
Chris Skordas, Partner
T +971 4 428 6377 M +971 56 177 2942 [email protected]
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Herbert Smith Freehills LLP 2019 The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on the information provided herein.
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