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On 1 April 2020, the Dubai Financial Services Authority (the “DFSA”) amended its Markets Rulebook (“MKT”) and other relevant sections of its Rulebook Modules to provide for a simplified and streamlined regime for Small or Medium-sized Enterprises (“SME”) to access equity capital markets in, or from, the Dubai International Financial Centre (“DIFC”).
The purpose of the amendments is to particularly address the route by which SMEs can apply to have their shares admitted to the DFSA’s Official List of Securities and therefore, encouraging SMEs to list on Nasdaq Dubai. The amendments provide appropriate and proportionate regulatory standards to match the smaller size of SMEs, whilst at the same time providing adequate levels of investor protection.
The amended regulations recognise the importance of SMEs to the UAE economy and should allow SMEs easier and less costly access to equity financing.
An entity applying to admit its shares to the DFSA’s Official List of Securities will be classified as an SME if the aggregate market value of the shares it is applying to list is reasonably expected to be less than US$250 million in value.
An entity that has already had its shares admitted to the DFSA’s Official List of Securities will be classified as an SME if the aggregate market value of its shares when admitted was less than US$250 million and the average market value of its listed shares has not exceeded US$500 million for 90 consecutive days. In the event that the aggregate market value of an SME’s listed shares exceeds US$500 million for 90 consecutive days an entity will lose its SME status.
The eligibility requirements for listing set out in MKT have been amended for SMEs so as to be proportionate to the nature, scale and resources of SMEs. Examples of the changes that have been made to MKT and the different eligibility rules that apply to SMEs are as follows:
The DFSA has amended the ongoing post-listing requirements for SMEs in MKT. Most of these amendments particularly relate to the expectation that the corporate governance of an SME may be less sophisticated than that of larger listed entities and therefore certain additional requirements are in place to protect investors. These include:
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