The Dubai Financial Services Authority (DFSA) on Wednesday announced introduction of a new Markets Law and amendments to the Regulatory Law, mainly designed to promote investor protection.
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai, has enacted two Dubai International Financial Centre (DIFC) Laws — the Markets Law 2012 and the Regulatory Law Amendment Law 2012 — both administered by the DFSA. These were enacted on June 7, 2012, and come into force on July 5, 2012, according to DFSA.
The new Markets Law 2012, which replaces the current Markets Law 2004, brings about a number of significant changes including changes to prospectus disclosure, what activities constitute an offer, market misconduct provisions and corporate governance. The prospectus disclosure changes include the requirement for a prospectus to be formally approved by the DFSA before it can be used to make an offer of securities to the public, or to have the securities referred to in the prospectus admitted to the Official List of Securities maintained by the DFSA.
The new laws are designed to promote investor protection in a manner that better aligns the DIFC to international standards, particularly European Union (EU) requirements and the Organisation for Economic Cooperation and Development.
“These changes bring our markets regime into closer alignment with the EU requirements while retaining features necessary to accommodate regional needs and circumstances. The DFSA’s supervisory oversight has also been expanded to include auditors for companies incorporated in the DIFC which seek listing on an exchange in the DIFC or in another jurisdiction,” DFSA chief executive officer Ian Johnston said.
Such regulatory oversight of auditors, Johnston said, would allow for the passporting of auditors registered by the DFSA into the EU, thus enabling those auditors to conduct audits of DIFC-based companies where they seek listings in the EU.
“These changes will also allow the DFSA to meet Principle 8 of the Core Principles of Independent Audit Regulators by the International Forum for Independent Audit Regulators, of which the DFSA is a member,” he added.
The amendments to the Regulatory Law 2004 support the changes brought about by the new Markets Law regime, for example, the law now provides for the DFSA to undertake regulatory oversight of auditors of DIFC-incorporated companies listed on an Authorised Market Institution (AMI) or any other exchange.
The amendments also make changes to the recognition powers of the DFSA with respect to cross-border trading including recognition of alternative trading systems, the quasi exchanges which are developing an increasingly important role in trading of financial instruments on the international capital markets.
The changes permit non-DIFC exchanges and clearing houses meeting certain regulatory standards to provide access to their facilities to persons located in the DIFC and permit non-DIFC firms meeting certain regulatory requirements to be remote members of an AMI in order to trade investments on a DIFC exchange from a place of business outside the DIFC.