Welcome to the Saudi Arabia focus edition of Law Update.
One of the key markets in the Middle East and North Africa (MENA) that continues to lead from the front is the Kingdom of Saudi Arabia (KSA). As the largest country in the Middle East and the 18th largest economy in the world, the progress KSA continues to make is underpinned by its Vision 2030 that envisions developing the country as an investment powerhouse and hub that ultimately connects Asia, Europe, and Africa. Given Saudi Arabia’s significance to the regional economy, our team of experts have prepared a range of pertinent articles that provide insights into new laws, regulations, and the legal landscape in the Kingdom.
This edition will provide you with an up-to-date guide on matters such as; the framework issued by the Saudi Central Bank on IT governance, the anti-corruption landscape under Vision 2030; we also provide practical tips for dispute avoidance. This is only a snapshot; there are many more articles within the KSA focus section for you to read, which we hope you will find valuable and enjoyable.Read the edition
On 14 March 2021, Dubai Airport Free Zone Authority (DAFZA) issued new Dubai Airport Free Zone (DAFZ) Implementing Regulations (New Regulations). The New Regulations were approved by Administrative Resolution No. (ADM 004 2021) Regarding Approving DAFZA Implementing Regulations 2021.
The New Regulations are the corporate rules and regulations that determine the different legal structures that can be incorporated in DAFZ and how such entities legally operate once incorporated. Together with a DAFZ company’s memorandum and articles of association, the New Regulations provide the legal and contractual basis upon which a DAFZ company manages its affairs.
The New Regulations came into force on 14 March 2021 and should be applied by existing and new DAFZ entities from that date onwards. The old Implementing Regulations which have been in force since 1998 are repealed and are replaced by the New Regulations in their entirety.
The New Regulations apply to existing branches and companies that were incorporated in DAFZ under the old Implementing Regulations. They will also apply to any new entity that establishes itself in DAFZ after 14 March 2021.
No. The New Regulations came into force immediately on 14 March 2021. However, DAFZA has stated that it will not levy fines or sanctions for a period of 6 months for any breaches of or non-compliance with the New Regulations to facilitate a smooth transition. This does not mean that a DAFZ company does not need to comply with the provisions of the New Regulations for six months, but if the DAFZ company is late in complying or fails to comply in the six month period then there will not be a levy or sanction for doing so.
DAFZA has thoroughly updated its Implementing Regulations so as to provide greater flexibility and clarity for DAFZA’s existing and prospective customers in light of developments in the business environment and to reflect the ever-changing dynamic growth of business in the UAE in a worldwide context. The New Regulations also reflect international best practice for providing platforms for doing business.
More specifically, the UAE Securities and Commodities Authority (SCA) in November 2020 allowed free zone companies in the UAE to list and offer shares on the Dubai Financial Market (DFM) or the Abu Dhabi Securities Exchange (ADX) pursuant to an amendment to SCA’s existing Offering Rules (Chairman of SCA Decision No. (11/Chairman) of 2016) by issuing Chairman of SCA Decision No. (25/Chairman) of 2020. So as to facilitate DAFZ companies to be able to list and offer shares to the public on these securities exchanges, DAFZA has created a new type of entity being a “public limited company” (PLC) which crucially has no limit on the number of shareholders it can have. The New Regulations for PLCs provide for corporate governance and requirements that are expected of public companies to reflect international best practice.
Yes. In the UAE a DAFZ PLC may now list its shares on any of the three following exchanges:
Each one of these exchanges has its own additional eligibility requirements for a DAFZ PLC to list on its exchange but it should be noted that in February 2021 the DFM issued its own listing rules for free zone companies, including a DAFZ PLC (regulations for Listing Free Zone Companies in Dubai Financial Market).
Further, the DFM and ADX are regulated by SCA and so SCA’s approval of the IPO of a DAFZ PLC will be required in accordance with SCA’s Offering Rules and various other SCA rules. Nasdaq Dubai is regulated by the DFSA and so the DFSA’s approval of the IPO of a DAFZ PLC will be required in accordance with the DFSA’s Markets Rules.
The listing requirements for a DAFZ PLC wishing to IPO and list are determined by SCA and the DFM for a listing on the DFM, by SCA and the ADX for a listing on the ADX and the DFSA and Nasdaq Dubai for a listing on Nasdaq Dubai.
The Al Tamimi & Company’s Capital Markets team was involved in the amendments to SCA’s Offering Rules and the design of the New Regulations which is a part of a Government of Dubai 10X Project to develop the local capital markets to encourage free zone companies to list. We have intimate knowledge of the new developments and can assist free zone companies looking to IPO in the future.