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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Faisal Raad - Special Consultant - Banking and Finance
Until recently it was practically possible for offshore entities to market and/or sell non-Jordanian securities in Jordan without any regulatory approvals or use of a locally licensed company, but this era now appears to be at a close. The rise of such activity over the last several years prompted the need to ensure that all sector participants are on an even playing field and that the interests of local investors are sufficiently protected. To this end and pursuant to the Securities Law No (18) of 2017 (the “Securities Law”), the Jordan Securities Commission (the “Commission”) has introduced the Instructions for Marketing or Selling Non-Jordanian Securities in Jordan of 2021 (the “Marketing Instructions”) the intention of which is provide for greater clarity on the roles, rights and obligations of all relevant parties with respect to any and all activities relating to marketing and/or sale of non-Jordanian securities in Jordan, including any ancillary activities relating to the promotion or advertisement of the same (the “Marketing Services”).
The Marketing Instructions clearly limit the provision of Marketing Services to locally licensed Financial Service Companies and prohibits any unauthorised party from conducting the same in Jordan. Under the Marketing Instructions, Financial Service Companies are defined as “a legal person engaged in the activities of a financial broker (agent or principal), an investment manager, a financial advisor or issuer, or any other activities arising pursuant to the Securities Law, any regulations, instructions or decrees issued thereto”. Consequentially, any and all foreign entities wishing to market or sell non-Jordanian securities in Jordan will have to do so by utilising a locally licensed Financial Services Company.
In order for a Financial Services Company to commence the provision of Marketing Services or any activity directly or indirectly relating to the same, they must first procure the approval of the Commission’s Board of Commissioners (the “Board”) and are required to enter into an agreement relating to the non-Jordanian securities with the relevant Issuer. For these purposes, an Issuer includes the issuer of non-Jordanian securities registered or licensed by a regulatory authority comparable to the Commission.
In order for the Financial Services Company to obtain the Board’s approval, they must first submit an application to the Board in an approved format along with the following information, among others (the “Application”):
The Board shall review the Application and ancillary documents within thirty days from the date of submission.
To ensure that the Financial Service Companies perform their obligations under the Marketing Instructions, the Board is empowered to require the Financial Services Company to provide an unconditional bank guarantee or any other form of security in favour of and in a form acceptable to the Board. Additionally, the Financial Services Company is liable for any mistake or act of negligence arising from its Marketing Services and any acts involving fraud, misrepresentation, the provision of incorrect or misleading documents or information to the Board, the investor, or any other third party. Particularly, such liability shall also extend to the Chairman of the Board of Directors of the Financial Services Company, the Members of its Board of Directors, its executive committee or its general manager, as applicable, , shall be jointly and severally liable with the Financial Services Company for the perpetration of any such acts or the violation of any provision of the Marketing Instructions and for any harm suffered by the investor or third party arising therefrom.
In addition to the above-mentioned obligations, the Marketing Instructions require the Financial Services Company to perform the following, among others:
It is worth noting that as a precautionary measure, the Commission is entitled to classify the categories of investors that the Financial Services Company may direct their Marketing Services to, based on the Investors’ requisite level of experience and professionalism, in addition to setting the minimum investment level for each category of Investor.
The Marketing Instructions also require the Financial Services Company to ensure that its agreement with the Issuer contains, at a minimum and among others, the following provisions:
In light of the above, the expectation is that the Marketing Instructions will add greater clarity to the legal framework underpinning the marketing and sale of non-Jordanian securities in Jordan and afford greater protection to the interests of the investor, while simultaneously providing an effective platform to enhance growth of this burgeoning sector in Jordan.
Given the new level of regulatory attention being placed on the marketing and sale of non-Jordanian securities in Jordan, it is recommended that all offshore Issuers and local Financial Services Companies pay greater attention and care to their offerings in Jordan.
Al Tamimi & Company’s Banking and Finance team regularly advises on financial agreements and transactions. For further information please contact Faisal Raad (email@example.com) or Thamer Shomar (Th.firstname.lastname@example.org).
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