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
Federal Decree-Law No. 51 of 2023 (the “New Bankruptcy Law”), which will come into effect on 1 May 2024, will exclude financial institutions and insurance companies regulated by the Central Bank from its scope. Instead, the UAE Central Bank (“CBUAE”) has introduced the Recovery Planning Regulation (“Recovery Regulation”), a dedicated insolvency and rescue framework for financial institutions and insurance companies it regulates. We understand that the Recovery Regulation is part of a broader framework for resolution, rescue and recovery of stressed financial institutions and subject to further statutory oversight. We also expect further regulation to be issued in supplementing this framework and the Recovery Regulation.
The Recovery Regulation requires financial institutions (i.e. local banks, branches of foreign banks, finance companies, insurance companies and other licensed financial institutions) to devise recovery plans covering rescue options, stress scenarios, business continuity arrangements, capital indicators etc… The goal of the recovery plan is to equip financial institutions to navigate periods of severe financial challenge and facilitate their recovery.
The Recovery Regulation applies to financial institutions which includes banks, finance companies, insurance companies, branches of foreign banks and insurance companies, and any other licensed financial institution designated by CBUAE (“Institutions”).
The Recovery Regulation requires financial institutions to establish a recovery plan, comprising the following:
In light of the above, the recovery plan must be proportionate to the Institution’s complexity, size, group and organisational structure, risk profile and interconnectedness with the financial market. Additionally, the Institutions must assess whether they provide critical services including but not limited to payment, custody, clearing and settlement to the financial market in which they operate.
Specific indicators to be included in every recovery plan for banks and insurance companies, as outlined in the annex of the Recovery Regulation, which include:
In relation to large financial institutions with group entities recovery plans is to drawn up for the group that cover all entities within the group, and must consider in their plan the scenarios, recovery options, indicators and thresholds relevant to each group entity. A recovery plan should be submitted at least annually to CBUAE, unless otherwise indicated or requested by CBUAE.
For an Institution that is a UAE subsidiary of an institution whose parent entity is outside the UAE, the recovery plan must cover the UAE subsidiary. For an Institution that is a UAE branch of a foreign institution, the recovery plan must be tailored to its local branch operations.
Shariah compliant Institutions must obtain approval from its Internal Shari’ah Supervisory Committee on the recovery plan’s compliance with the applicable principles of Islamic Shari’ah.
Finally, by issuing the Recovery Regulation, the CBUAE considers recovery planning as an important crisis preparedness and management resource to avoid instances of systemic risk and not merely a compliance requirement. Therefore, under the Recovery Regulation, Institutions must have a recovery plan in place by 30 June 2024.