The first Law Update of 2024 is here, and our first focus of the year spotlights Healthcare and Lifesciences, a sector that is undergoing significant growth and development across the MENA region.
Our focus provides an insight into some of the most important regulatory updates across the region, such as the UAE’s groundbreaking law on the use of human genome, Kuwait’s resolution on nuclear and radioactive materials, the new regulations for healthcare services in Qatar, Egypt’s healthcare regulatory framework, and the impact of the Saudi Civil Transactions Law on the healthcare and life sciences sector … and there is so much more!
Beyond the healthcare pages our lawyers share with you multi-sector insights where you will discover articles on Dubai’s DIFC regulatory framework for startups, Bahrain’s commercial agencies law, and we also shed light on Kuwaiti civil code and the advantages of setting up a joint stock company in Saudi Arabia.Read the full edition
Sarah El Serafy
It has assumed the duties relating to central clearing, depository and registry activities which were previously undertaken by QE. Previously, the QE acted as the central registry and depository of listed equity and debt securities (shares, bonds and sukuks). The QE was also responsible for settlement of orders by Delivery vs. Payment (“DvP”) and for registering pledges over listed securities. The QCSD has now assumed these functions, leaving the QE with its core function of a securities trading market. The QCSD is licensed by the Qatar Financial Markets Authority (‘QFMA’_, the regulator of capital markets activities in Qatar.
The QCSD also provides related services, including registration, acceptance and transfer of government bonds and treasury bills (T-bills). The QCSD offers additional services including DvP, securities lending and borrowing settlement, management and follow-up of limits placed on non-Qatari shareholders, registration and authorisation of exchange-traded funds (ETFs) as well as services in connection with initial public offerings (IPOs).
The QFMA has issued Dealing Rules for the QCSD (the “Rules”) and a guide on procedures of QCSD (the “Guide”).
All registers of current shareholders recorded with QE will be transferred to the QCSD. The QE’s system will be linked to the QCSD’s system. The QCSD will also process all off-market transfers, either by inheritance or by court order.
This article sets out some of the key developments that have been introduced pursuant to the Rules.
The following entities must obtain the requisite license from the QCSD:
Central Depository and Registry
All securities offered for public subscription must be deposited with the QCSD. This includes shares, bonds, T-bills, sukuks, financial indices, derivatives, et cetera. Holders of deposited securities must open a depository account with the QCSD.
Any dealings related to the securities deposited with the QCSD must be executed by recording the relevant transaction on the QCSD’s electronic registration system.
Settlement and Clearing
The QCSD carries out all settlement and clearing of transactions executed by the QE. The QCSD is responsible for determining the net rights and obligations of each market participant and to settle the positions of such participants arising from trading in securities registered with the QCSD. The QCSD is also responsible for recording the transfer of title relating to such securities.
Pledging and Freezing of Securities
Pledges over securities are now executed through the QCSD instead of the QE. The Rules have introduced a provision relating to the assignment of rights secured by a pledge. The Rules permit the transfer of a right secured by pledge only by serving a notice upon the pledgor. The QCSD will then register the pledge in the name of the assignee.
A pledge agreement submitted to the QCSD must be authenticated by the Ministry of Justice in Qatar or notarised and legalised abroad for pledge agreements executed outside Qatar
If the QCSD receives a court order for the attachment of pledged securities by creditors other than the pledgee, the QCSD will first notify the court of the existing pledge with copy to the pledgee.
Local and international banks who wish to record pledges with the QCSD must be recorded as pledgee members with the QCSD instead of the QE. It is not clear how the existing pledgee members registered with the QE will be dealt with by the QCSD and whether there are new procedures required for those existing pledgee members.
Custody services are now regulated by the QCSD. Custodians are required to obtain the QCSD’s license and comply with QCSD’s requirements set out under the Rules.
The Rules set out the following criteria for registering as a custodian:
A custodian is required by the QCSD to open and maintain segregated accounts for its customers. The QCSD requires specific provisions to be incorporated in custody services agreements. Provisions relating to the conduct of business of custodians have also been introduced under the Rules.
Off Market Activities
Article 26 of the Rules relates to the settlement and clearing of off-market transactions (transactions excluded from trading system). Article 64 defines “off market transactions” as follows:
The QCSD is obliged to maintain confidentiality in respect of information provided to it by market participants and may not disclose such information or data except after obtaining the prior written consent of the concerned person or the QFMA, except for disclosures requested by a court order or public prosecution in an ongoing investigation.
The following accounts may be opened with the QCSD:
Custody account in the name of the owner, opened by the custodian.
The QCSD has taken over all activities and tasks that previously belong to the central registration department of QE, and it is important that those interested in the Qatari capital markets be aware of this. It is also important to note that all shareholders’ records which are currently recorded with QE are being transferred to the QCSD. QE will only carry out trading activities relating to its initial role as a stock exchange.