The first quarter of 2020 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). Our GCC Quarterly Review – Q1 2020 summarises a selection of the major developments in that period, with links to further reading where available.

Download the PDF version (10 pages) or read online below.

Global issues

Novel coronavirus guidance Novel coronavirus (Covid-19) has been declared a global pandemic by the World Health Organisation. The outbreak and related containment measures are having an impact worldwide and the situation continues to evolve rapidly. Global economies and businesses are taking various measures to address the disruption they face as a result of the Covid-19 outbreak. Businesses and their legal teams will be directly affected by challenges presented by the outbreak.

Our global teams have recently prepared a range of guides offering practical guidance on significant commercial and legal issues, which you can access on our dedicated Covid-19 page.

We understand that this is a difficult time for all our clients, their staff and families. To read about what Linklaters is doing to manage the impact of Covid-19, click here.

Measures to address the novel coronavirus in the GCC In response to the outbreak of Covid-19, governments around the world are introducing measures and restrictions to help citizens and businesses manage the resulting disruption, both in the short and long terms (read more…). All the GCC states have now put in place measures to help banks, companies and individuals deal with liquidity issues and promote financial stability. The common aim across the many GCC measures is to support businesses with temporary relief from principal and interest payments, interest rate reductions and reductions or exemptions from fee payments. The UAE has introduced the most comprehensive economic stimulus package to date in the GCC region. The UAE Central Bank has established an AED100 billion (USD27 billion) Targeted Economic Support Scheme. The scheme is available to provide zero-cost funds to banks so that they are able to defer loan repayments for private sector companies and retail customers in the UAE and to facilitate additional lending capacity of banks, through the relief of existing capital buffers. In particular, the amount of capital banks have to hold for loans to small and medium sized enterprises (SMEs) has been reduced, large exposure limits for the real estate sector has been raised, and banks are able to tap into a portion of their capital conservation buffers, while systemically important banks will be able to use all of their additional capital buffer for a limited period. Banks operating in the UAE must comply with the requirements mandated by the Central Bank in order to access the scheme, including allowing deferring loan repayments, extending maturity dates, waiving late payment fees and providing additional financing at reduced rates during the relief period to private sector companies, SMEs and individuals. The UAE Federal Government and the Governments of Abu Dhabi and Dubai have also announced financial stimulus and support packages. The Federal AED16 billion (USD4 billion) stimulus package focusses on supporting local business, including by reducing business costs (for example, through temporary suspensions of work permit fees and other charges).

The Securities and Commodities Authority (SCA) in the UAE has taken steps to help business continuity for listed companies. The SCA has issued circulars to listed public joint stock companies in the UAE requiring them to allow electronic attendance and voting at shareholder meetings, together with guidance on business continuity planning. This should help to mitigate the disruption companies will face in calling and holding company meetings, especially upcoming AGMs. Also, the SCA has issued a circular to adjust the limit down prices for shares traded on the UAE exchanges to protect against market volatility.

The Saudi Arabian Monetary Authority’s SAR50 billion (USD13.3 billion) economic stimulus package, the Private Sector Financing Support Program, aims to support the private sector and focuses particularly on supporting banks to continue lending to SMEs. It provides additional funding for banks in order to facilitate temporary loan repayment holidays and continued funding for businesses. Regionally, only Bahrain has introduced wage protection measures for private sector employees to date. More measures are likely given the fast-moving nature of the situation.

The recent wave of legal reforms to restructuring and bankruptcy regimes across the GCC mean that modernised regimes are available to help businesses facing financial distress, offering a lifeline to recovery or a route to an orderly liquidation. The UAE, DIFC, ADGM, Saudi Arabia, Oman and Bahrain have all introduced bankruptcy reforms in the last few years. These reforms have widely focussed on promoting a “rescue culture”, in order to reduce the number of unnecessary liquidations of viable companies. Many aspects of the new regimes are consistent with international “best practice”, allowing possibility of obtaining new financing on a priority basis and providing for a moratorium on enforcement. The ADGM adopted a bespoke regime for banks which face financial difficulty, the ADGM Bank Recovery and Resolution Regulations 2018 and the DIFC is considering similar reforms.

We have issued a series of notes on the UAE Bankruptcy Law (Federal Decree-Law No.9 of 2016) which is available via our Knowledge Portal. A new personal bankruptcy law has also recently been issued in the UAE (read more…). You can read more about the DIFC Insolvency Law (DIFC Law No.1 of 2019) and the Insolvency Regulations in our recent update (read more…). You can read more about Saudi Arabia’s bankruptcy regime (Royal Decree No.M/05 dated 28/05/1439H (13/02/2018G)) in our previous update (read more…).

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 reorganisation 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. Our global team have assembled FAQs, insights and briefings on the implications of Brexit for your business and beyond. You can read more on our website.

Dispute Resolution Across the Globe Year in Review and Year to Come: Linklaters’ online publication, Dispute Resolution Across the Globe: Year in Review and Year to Come, brings together analysis, thinking and highlights from our Dispute Resolution lawyers around the world, including the UAE. We summarise a selection of the major developments in global dispute resolution from 2019 and highlight some of main developments expected this year. The guide aims to give you a valuable overview, with links to more information where applicable.


New principles on sustainable finance in the UAE Financial services authorities across the UAE have together issued the country’s first set of Guiding Principles on Sustainable Finance. This initiative is a key part of the UAE’s commitment to support the United Nation’s Sustainable Development Goals, which are incorporated into the UAE’s national development plan, Vision 2021, and the plans of the emirates. The principles are a co-ordinated collaboration across federal, emirate and free zone bodies, including the Central Bank of the UAE, the SCA, the UAE Insurance Authority, the financial services regulators in the ADGM and the DIFC, the Ministry of Climate Change and Environment, the Dubai Islamic Economy Development Centre and three of the UAE’s exchanges; the Abu Dhabi Securities Exchange, the Dubai Financial Market and NASDAQ Dubai.

The new principles are voluntary and an initial step in promoting the increased integration of sustainable practices in the UAE’s financial sector, which will help to ensure financial stability and economic growth. Looking ahead, the various authorities are expected to implement more specific measures to embed sustainable business practices and environmental, social, and governance (ESG) principles in this sector, including sustainable finance initiatives which aim to mitigate negative environmental impacts and promote green projects. This is important for UAE companies as there is a growing expectation that organisations embrace sustainability and recognise and address ESG risks to ensure their resilience and long-term viability. We are seeing a rise in green and sustainability linked loans, which signals the early stages of a fundamental shift in the wider global economy. You can read more about ESG-related insights in a on our website.

Changes proposed to UAE’s agency law The UAE Cabinet has recently approved proposed amendments to the UAE’s agency law, Federal Law No.18 of 1981, which regulates commercial distribution and agency agreements in the UAE. The appointment of a local distributor or agent can be a less expensive and easier option for many foreign companies who want to do business in the UAE, without establishing a local presence or navigating complex foreign investment rules. In particular, the new rules are expected to allow the many family-owned companies in this sector to convert into public joint stock companies. This is an important development which will enable such companies to list on the local exchanges, which can facilitate their growth and expand investment opportunities for investors in the event of more local IPOs. Currently, the agent must be a UAE national or a company wholly owned by UAE nationals in order to register the agency arrangement with the UAE Ministry of Economy, which is a barrier to an IPO given any offering of shares would have to be restricted to UAE nationals only. The timeline for implementation of any new rules is not known.

Corporate Governance Guide for UAE public companies SCA Resolution No.(03/RM) of 2020 adopting the new Corporate Governance Guide for Public Joint Stock Companies in the UAE, which was issued in February, is expected to come into force soon. Implementation is due 60 days following publication, which is expected shortly. The SCA has stated that companies will be given a grace period until the end of 2020 to implement the revised rules. The resolution is based on the provisions of Federal Law No.2 of 2015 on Commercial Companies and repeals the SCA Chairman Resolution No.(7/RM) of 2016 concerning the Standards of Institutional Discipline and Governance of Public Joint Stock Companies, plus any conflicting regulations. You can read more about some of the key features of the new Corporate Governance Guide in our recent update.

UAE revises investor suitability rules Firms licensed by the SCA and conducting financial activities or services in the UAE must comply with revised requirements for the preparation and content of suitability and appropriateness reports for clients before recommending financial products or carrying out financial products transactions on their clients’ behalf. This does not apply to those considered to be “Qualified Investors”, who are considered to be capable of managing their investments independently. The revised definition of Qualified Investors is based upon the recently revised definition in SCA Chairman’s Decision No. 3/R.M. of 2017 Concerning Promoting and Introducing (read more…). The general rule is that SCA licensed firms must consider the investor’s particular circumstances and requirements, including their investment objectives, their financial situation, knowledge and experience. SCA Resolution No.(05/RM) of 2020 on Suitability and Appropriateness Criteria comes into force 30 days after days following publication, which is expected shortly.

Dubai Court judgment enforced in EnglandThe English High Court has now recognised and enforced a judgment of the Dubai Courts in the case of Lenkor Energy Trading DMCC v Irfan Iqbal Puri [2020] EWHC 75. The case was decided on common law principles, as there is currently no enforcement treaty in place between the UAE and the United Kingdom which would apply. In accordance with common law rules, the English Court determined that the Dubai Court judgment was a final and conclusive money judgment capable of being enforced and the Dubai Court had jurisdiction (according to the English rules of the conflict of laws) to determine the subject matter of the dispute. The English Court did not re-examine the merits of the Dubai Court judgment. The case is interesting because:

  • the English Courts rejected a challenge based on public policy grounds. Even though the Dubai Court decision was based on legal reasoning which was different from English law, this was not contrary to English public policy; and
  • the case may be a helpful precedent when it comes to future applications to enforce an English court judgment in the UAE, which is a challenging process which is ultimately likely to fail. In order for a UAE Court to enforce a foreign judgment, reciprocity of treatment is required, and the conditions set out in Article 85 of Cabinet Resolution No.57 of 2018 must be met. Now reciprocity of treatment has been evidenced by this judgment, it remains to be seen whether the UAE Courts will be more willing to enforce an English Court judgment.


Money services in the DIFC - DFSA introduces Rulebook changes The Dubai Financial Services Authority (DFSA) has introduced a series of updates to its Rulebook modules to revise its regime for “Providing Money Services” (PMS) in the DIFC, following a consultation in late 2019. The previous prohibition on PMS (other than where such activities are conducted in connection with and a necessary part of another regulated financial service) is relaxed and a wider range of payment services activities are permitted. The DFSA will regulate “Arranging and Advising on Money Services” as a new type of financial service. Firms engaging in these activities will be subject to the DFSA’s GEN Rules, many of the COB Rules, AML Rules and revised PIB Rules. While the DIFC has expressed the view that these activities should not be considered to be engaging in deposit-taking activities in the DIFC contrary to Federal law, the DIFC notes that firms need to be mindful of respecting the Federal restrictions. Firms can only carry out these activities in respect of electronic currencies (they must not receive physical currency) and all Dirham transactions must be settled through the accounts of a financial institution that is licensed by the Central Bank to accept deposits. The DIFC has stated that it intends to take a cautious approach to the licensing and supervision of firms active in this area (such restricting the nature, volume or size of transactions or the type of clients with whom firms can deal). The new regime comes into force from 1 April.

New SME listing regime in the DIFC SMEs can list their shares on an authorised exchange in the DIFC under a new regulatory regime, with effect from April. The two exchanges in the DIFC are NASDAQ Dubai and the Dubai Mercantile Exchange. The regime incorporates many aspects of the existing DFSA regime set out in the Markets Law 2012 and Markets Rules, which are sufficiently flexible to apply to SMEs, as well as introducing some new bespoke rules for this type of company. The range of SMEs able to use the new regime will depend on their maximum market capitalisation; applicants must have an expected market capitalisation at time of listing of less than USD 100 million. SMEs must comply with existing requirements to produce a prospectus, make disclosures, apply the “comply or explain” corporate governance framework and supply financial statements. Some of the new rules adjust the requirements as to trading record, mandatory lock-in period, the prohibition on share repurchases and require the appointment of a compliance adviser rather than a sponsor firm. The reduced fee structure is broadly comparable to SME listing regimes in other jurisdictions. This approach balances investor protection with lighter touch standards than under the existing DFSA regime.

DFSA strengthens suitability requirements for Professional Clients DFSA authorised firms must comply with revised rules on suitability assessments of financial products for “Professional Clients” with effect from January. The changes are intended to ensure authorised firms meet their obligation to ensure the suitability of the advice they give to their customers by restricting the circumstances and manner in which a firm can limit the suitability assessment they carry out. It is no longer possible for authorised firms to not carry out any suitability assessment at all. Authorised firms can still carry out limited suitability assessments for Professional Clients provided that:

  • the firm gives written notice to the Professional Client clearly stating that it will consider suitability only to the extent specified in the notice; and
  • the Professional Client must give express consent by signing that notice.

The rationale for limiting the suitability assessment by an authorised firm should focus on considerations relevant to a particular Professional Client, including their investment objectives, their financial situation, knowledge and experience. Any limited suitability assessment must document why a product within that range is suitable for that Professional Client. Any full waiver arrangements with existing Professional Clients cannot be relied on going forwards. Authorised firms should review their policies and procedures to ensure they comply with the revised rules. Many changes are to align with the European Union’s Markets in Financial Instruments Directive 2014 (MiFID II). You can read more about MiFID II on our website.

See also: Consultation Paper No. 128 the DFSA.

New start-up accelerator for the DIFC Regional FinTech start-up companies will now be able to apply to new accelerator programme known as the FinTech Hive Scale Up programme. It is designed for start-up companies who have already gone through Series A financing round, which is the first significant round of financing from external investors, and whose target market is in the MENA region. Launched by the DIFC’s FinTech Hive, the new programme is designed to help these types of businesses grow further and faster through access to funding, resources, support services and venture capital investor networks. Earlier stage companies can apply to join the DIFC’s existing initiatives such as the DIFC’s FinTech Hive Accelerator and Startupbootcamp. Companies with innovative and disruptive technologies in the financial sector may also test these in a sandbox environment under the DFSA’s Innovation Testing Licence Programme. The DFSA has recently published its Innovation Programme Progress Report 2020, setting out insights since the programme’s inception in 2017.

DIFC consults on financial institution recovery regime The DIFC is proposing to enact a new recovery and resolution regime for certain DIFC financial institutions carrying out activities raising substantial systemic risks, and which experience financial difficulty. The proposed regime is based on international best practice, and draws specifically on the Financial Stability Board’s (a body created and mandated by the G-20) “Key Attributes on Effective Resolution Regimes for Financial Institutions” and related guidelines, together with the Basel Committee on Banking Supervision’s Guidelines for identifying and dealing with weak banks. The framework encompasses a range of measures, including relating to powers and tools available to the DFSA (including to address early intervention and recovery planning in the event of a deterioration in the situation of a DIFC bank and resolution planning where a DIFC bank is no longer viable), set-off, netting, collateralisation and segregation of client assets, funding of firms in resolution, powers to require DIFC banks to hold additional loss absorbing capacity and the legal framework conditions for cross-border co-operation. The regime intends to allow the DFSA a sufficient degree of discretion in the application of the regime, reflecting the complex nature of addressing the challenges faced by financial entities, especially in a cross-border context. In particular, the regime is designed to apply to DIFC entities (whether DIFC entities or DIFC branches of foreign banks) which can carry on the Financial Service of Accepting Deposits, Providing Credit or Dealing in Investments as Principal or Managing a Profit-Sharing Investment Account, together with any domestic holding companies. The consultation on the proposed framework is set out in Consultation Paper No.131 and closes in April. It anticipates changes to the Regulatory Law 2014, a new Recovery and Resolution Rulebook and changes to certain other DFSA Rulebook Modules. Currently, there is no separate restructuring regime for financial institutions in the DIFC. The ADGM adopted the ADGM Bank Recovery and Resolution Regulations in 2018.

Leases regulation in the DIFC Those leasing office space and residences in the DIFC and their landlords benefit from new protections and owe specific obligations under a new DIFC Leasing Law (DIFC Law No.10 of 2018) and related regulations. The new rules came into force in January. Lessees must pay their rent on time and only use the property as specified in their leases and they must not cause a nuisance. Landlords must ensure that the lessee can use and enjoy the property as intended. There are special provisions for residential leases, including a new tenancy deposit scheme which will be subject to maximum limits, and a requirement for regular reports on the condition of the property. There are also clearer provisions relating to the termination of leases. These changes should be of benefit to businesses in the DIFC, where evidence of office space (such as a signed lease agreement) is required in order to obtain a licence. A new DIFC Courts Small Claims Leasing Tribunal is available to hear lease disputes, following its establishment in November 2019 by DIFC Courts Order No.5 of 2019.

Update on recent decision of the Judicial Tribunal for the Dubai Courts and the DIFC Courts The Judicial Tribunal for the Dubai Courts and the DIFC Courts, which rules on conflicts of jurisdiction and conflicts of judgments between the two courts, has issued a recent judgment (Al Taena: AF Construction Company LLC (formerly Al Futtaim Carillion - Abu Dhabi LLC) v. Power Transmission Gulf, Cassation No. 8/2019 (JT)) with two interesting features. These are:

  • the DIFC Courts have jurisdiction to hear an application for the ratification of a DIFC-LCIA arbitration award, in circumstances where the arbitral tribunal held its sessions onshore in Dubai. This affirms the position under DIFC law that a tribunal may hold its sessions in any location it considers appropriate (not just in the legal “seat” of the arbitration) and any resulting award will still be considered issued by the DIFC-LCIA; and
  • the defendant in this case was based in Abu Dhabi, which means that an application to enforce the DIFC-LCIA arbitral award, if and when ratified by the DIFC Courts, is likely to be made to the Abu Dhabi Courts. The Abu Dhabi Courts should enforce any DIFC Court judgment ratifying the award in accordance with the referral procedures under Federal law (in particular, UAE Cabinet Resolution No.57 of 2018 concerning the Executive Regulations of Federal Law No.11 of 192) but this remains untested as far as we are aware.


ADGM orders the recognition and enforcement of a foreign arbitral award The ADGM Courts have ordered the recognition and enforcement of a foreign arbitral award for the first time, in accordance with the New York Convention 1958 and applying the ADGM Arbitration Regulations, in the recent case of A4 v B4. The case confirms that the arbitral award, which was issued from an LCIA arbitration seated in London, is an award to which the New York Convention applies and is required to be recognised and enforced within the ADGM as if it were a judgment of the ADGM Courts. Although the award debtor made no objection to the recognition and enforcement of the award, the Judge expressed the view that none of the limited grounds to refuse recognition and enforcement would apply (had they been raised), including on UAE public policy grounds.

An interesting feature of the case is that both parties were incorporated in “onshore” Abu Dhabi and there was no evidence as to whether the award debtor had assets in the ADGM. It is therefore possible that further enforcement action may be required in the courts of Abu Dhabi or another Emirate, with the ADGM Courts in the role of a conduit jurisdiction. In considering possible public policy issues with claimants seeking to use the ADGM Courts as a conduit to enforce in other courts in the UAE, the Judge commented that there was “more room for debate” on this issue. However, the Judge’s view was that it was not in itself objectionable or contrary to the public policy of the UAE to have parallel enforcement proceedings in different jurisdictions of the UAE and it was desirable that the different Courts of the UAE work together harmoniously. There was no reason to think it would be detrimental for the award debtor if the award was recognised and enforced by order of the ADGM Courts rather than or in addition another court or courts of the UAE. Where the assets are located outside the ADGM, the UAE legal framework allows an ADGM Court order recognising the award to be referred for enforcement to the relevant court in accordance with applicable laws.

It is possible that parties may seek to use the ADGM Courts as a gateway to enforce arbitral awards (and perhaps also court judgments) in Abu Dhabi, even where there are no assets in the ADGM, in an effort to avoid some of the challenges in enforcing foreign awards and judgments onshore in the UAE. Drawing on the experience in the DIFC, we anticipate that the outcome of this potential route to enforcement would be highly uncertain. Cases attempting to use the DIFC Courts as a conduit to enforce foreign court judgments against assets onshore in Dubai, where there was no nexus to the DIFC, have not been enforced successfully in the Dubai Courts, as far as we are aware, and this route to enforcement is highly risky and likely to be subject to the oversight of the Judicial Tribunal (which was set up to resolve conflicts of jurisdiction between the Dubai courts and the DIFC courts), should cases of this nature be referred to it. Where an arbitral award has no nexus with the DIFC, it seems clear the successful party in the arbitration will not be able to use the DIFC Courts as a conduit jurisdiction to execute the award in onshore Dubai, based on commentary in Judicial Tribunal cases to date.

ISDA publishes opinion on collateral arrangements under ADGM law The International Swaps and Derivatives Association (ISDA) has published two new legal opinions on the validity and enforceability of collateral arrangements under ISDA Credit Support Agreements within ADGM. The opinions, for each of collateral takers and collateral providers located in ADGM, are the first such opinions to have been issued by ISDA for a GCC jurisdiction. Under ISDA's credit support documentation, trading parties can pledge variable levels of collateral in support of their trading positions in an effort to reduce exposure to insolvency risk. More specifically, some of the key points addressed in the opinions are:

  • the security interests should be valid, including where the security is granted over a fluctuating pool of collateral, where the security-taker has the right to use and dispose of collateral
  • unsecured creditors rank pari passu;
  • the rights of the security taker should not be limited by the appointment of an officeholder under the ADGM insolvency regime; and
  • the ADGM Courts should recognise and uphold the choice of governing law and submission to jurisdiction.

As ADGM law is based on English law and aspects of English law are directly applicable in the ADGM, the ADGM Courts should adopt the same approach as the English courts in various matters, including determining the location of securities (for example, dematerialised or held through a custodian or securities depositary) and recharacterisation risk. The opinions complement ISDA’s opinion on the enforceability of close-out netting under ADGM law under the 1992 and 2002 ISDA Master Agreement. Importantly, the close-out netting opinion confirms that, under ADGM law, a derivative contract should not be void or unenforceable on the basis it constitutes a gambling transaction and includes a similar qualification regarding the UAE Penal Code gambling provisions.

ADGM updates prudential rules The Financial Services Regulatory Authority of the ADGM has introduced a revised prudential framework requiring regulated firms to have a robust liquidity risk management framework more closely aligned with the Basel III liquidity standards. Key features of the revised Prudential – Investment, Insurance Intermediation and Banking Rulebook include:

  • a new requirement to comply with a Net Stable Funding Ratio, which requires firms to maintain a stable funding profile over medium to long term timeframe. This complements the Liquidity Coverage Ratio, already fully implemented for ADGM firms, which addresses short-term liquidity concerns;
  • changes to how Large Exposures are assessed, and enhanced reporting requirements for such exposures; and
  • a reduced set of disclosure requirements, more proportionate to the risk profile of ADGM regulated entities.

Changes to crypto-asset regulation in ADGM The FSRA has amended its framework to regulate crypto asset activities conducted in or from the ADGM. The framework was introduced in 2018 and was the first of its kind in the MENA region (read more…). Significant revisions to, include:

  • the term “Virtual Assets” is now used to describe crypto assets, rather than “Crypto Assets”. This is the terminology used by the Financial Action Task Force (FATF)
  • Virtual Assets will no longer be regulated as a separate category of activity - “Operating a Crypto Asset Business” – and specified activities related to Virtual Assets will instead be regulated within existing categories of activities (such as Providing Custody, Operating a Multilateral Trading Facility, Dealing in Investments, etc.).

You can also read about developments in the fintech sector in our blog, FintechLinks.

Other Free Zones

DMCC issues new Companies Regulations The Dubai Multi Commodities Centre (DMCC) has issued new Companies Regulations, replacing the DMCC Company Regulations 2003 and related rules and regulations, which are in force from January. Many of the changes allow greater flexibility for DMCC companies, including:

companies will have the flexibility to adopt template Articles prescribed by the DMCC Authority, amend clauses within the template Articles, or adopt their own Articles entirely;

  • the ability to have different classes of shares;
  • no minimum capital requirements (in most cases);
  • new dormant status; and
  • an increased ability to transfer company incorporation into DMCC.

Companies should be aware of areas where they need to take action to comply. For example, the appointment of a company secretary and the maintenance of company registers are now mandatory, there are much more detailed provisions on company accounts and auditors, there are more onerous provisions in relation to dividends and there is a new, broader prohibition on financial assistance to directors. The new regulations also confirm that the Federal Commercial Companies Law (Federal Law No.2 of 2015 Concerning Commercial Companies) does not apply to DMCC companies, but DMCC companies can use the procedures under the Federal Bankruptcy Law (Federal Decree Law No.9 of 2016) if they face financial difficulties. Companies will need to ensure they comply with the new regulations, within the 2-year grace period. At the same time, the DMCC has also adopted other new regulations, including relating to employment and licensing, which came into effect in January.

Saudi Arabia

SAMA issues rules and guidance on non-performing loans The Saudi Arabian Monetary Authority (SAMA) issued new Rules and Guidelines on Management of Problem Loans in January, to help banks licensed under Banking Control Law (Royal Decree no. M/5 dated 22/2/1386AH) address their non-performing loans (NPLs). The Rules set out a framework which would facilitate the rehabilitation of viable borrower and deal with the management of NPLs and any resulting restructuring processes. The Rules and the Guidelines aim to help banks identify NPLs early, as a preventative measure, to promote strategies to deal with NPLs so reduce the level of NPLs as early as possible, which may include actions such as restructuring, provisioning, collateral valuations and foreclosure or other legal processes. The NPL strategy of banks should be backed by an operational plan and supported by a dedicated unit to handle workout cases. The Rules issued by SAMA are mandatory and the Guidelines constitute best practices for banks.

Regulation of digital-only banks in Saudi Arabia Additional Licensing Guidelines and Criteria for Digital-Only Banks (which conduct their business mainly through digital channels (e.g. the web and mobile applications)) in Saudi Arabia were issued in February by SAMA. In order to successfully apply for a Digital-only Bank license, a bank must meet certain capital and liquidity requirements, maintain a place of business (but not necessarily branches) in Saudi Arabia and satisfy the requirements applicable to conventional banks relating to governance, prudential requirements, consumer protection, anti-money laundering procedures and risk management. Any such bank must also have an exit plan to manage customer funds and ongoing businesses should the business face difficulties.

Proposed bancassurance rules in Saudi Arabia SAMA consulted on draft Rules Governing Bancassurance Activities. Bancassurance is a mechanism by which banks or financial institutions and insurers collaborate to distribute and market insurance products. The draft rules seek to raise the standard of regulation around the sale of insurance products by banks on behalf of insurers in Saudi Arabia, to strengthen SAMA’s oversight and ensure better consumer protection. For example, activities carried out by banks will be limited to selling insurance products on behalf licensed insurers (for a commission) and banks may not receive premiums, issue policies or handle claims on behalf of insurers. Banks also may not sell banking and insurance products together and may not contract with more than one insurer regarding the same product line. When carrying out these activities, banks will be required to comply by rules regarding professional conduct, advertising and marketing. The timeline for implementation of any new rules is not known.


Oman’s new bankruptcy regime Omani Royal Decree No.53 of 2019 is Oman’s first stand-alone bankruptcy regime. It repeals and modernises the previous bankruptcy regime, drawing on international and regional best practice. The new regime has a rescue focus, with new procedures available to debtors experiencing financial difficulties. The available procedures are:

  • restructuring, a new procedure enabling a consensual restructuring for a debtor in financial and administrative hardship prior to the payment default;
  • preventative composition, which is similar to restructuring and available to a debtor facing hardship in circumstances where the continuation of the business would lead to the inability to repay debts;
  • judicial composition, which is a court-led restructuring process; and
  • bankruptcy, a regime which a debtor or a creditor may apply for in the event of debtor’s payment default and which is a gateway to liquidation.

The availability and progress of the procedures are subject to strict timetables. The new procedures will be available from July.

Oman’s new foreign investment law in force A new foreign investment regime came into force in January, following the enactment of Omani Royal Decree No.50 of 2019. Designed to incentivise foreign investment in domestic companies and the diversification of the local economy, the new regime is flexible in allowing up to 100 per cent. ownership of Omani companies, with the approval of the Ministry of Commerce and Industry (MOCI). Similar to other regional foreign investment regimes, Oman’s regime anticipates that only companies engaged in certain activities will be able to receive foreign investment. These activities have not yet been expressly set out in any published secondary regulations, but we understand that the MOCI has released an unofficial "negative list" of 37 commercial activities.