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	(255938,24884,'CurrentUserID','1'),
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	(248653,24269,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7935&amp;action=edit'),
	(248654,24269,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n\r\n<table style=\"height: 490px;\" width=\"1131\">\r\n<tbody>\r\n<tr>\r\n<td width=\"211\"></td>\r\n<td width=\"211\"><strong>Previous Regulations</strong></td>\r\n<td width=\"211\"><strong>2018 Regulations</strong></td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\">License Validity</td>\r\n<td width=\"211\">Valid for two years and renewable for a further year</td>\r\n<td width=\"211\">Valid for three years and renewable for same period unless required by Central Bank</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\">Outward Investment</td>\r\n<td width=\"211\">Prohibited to lend, deposit or invest in more than 7% in one institution or in one group</td>\r\n<td width=\"211\">Participation in the share capital only of certain types of companies and each such participation must not exceed 10% of its aggregate capital</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\">Minimum Paid Up Capital</td>\r\n<td width=\"211\">AED 35 million or 50 million for LLCs</td>\r\n<td width=\"211\">AED 150 million irrespective of the form of company</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\">Application - Proof of Paid-up Capital</td>\r\n<td width=\"211\">AED15 million deposit certificate with a bank operating in UAE + undertaking for the rest of the amount</td>\r\n<td width=\"211\">AED 25 million deposit certificate with a UAE Bank + undertaking for the rest of the amount</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\"></td>\r\n<td width=\"211\">N/a</td>\r\n<td width=\"211\">Letter of unconditional guarantee from a UAE bank for the entire sum of the paid-up capital</td>\r\n</tr>\r\n</tbody>\r\n</table>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Additions to the 2018 Regulations</strong></p>\r\n\r\n<table style=\"height: 281px;\" width=\"1131\">\r\n<tbody>\r\n<tr>\r\n<td width=\"211\"><strong>Prepaid Cards</strong></td>\r\n<td width=\"431\">Finance Companies can act as program managers for reliable prepaid cards</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\"><strong>Introduction of outsourcing activities</strong></td>\r\n<td width=\"431\">The Regulations permit outsourcing of its permitted activities and lays out the requirements for such processes. This is the first time that the Central Bank has included outsourcing as a part of certain regulations.</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\"><strong>Confidentiality of data</strong></td>\r\n<td width=\"431\">Another first being the Regulations lay emphasis on confidentiality of data available to it and safeguarding of such confidential data even while outsourcing.</td>\r\n</tr>\r\n<tr>\r\n<td width=\"211\"><strong>IT technology and Security</strong></td>\r\n<td width=\"431\">The Regulations details out technical facilities that must be available with finance companies in order to keep the records of its customers</td>\r\n</tr>\r\n</tbody>\r\n</table>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-7997\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"1118\" height=\"1034\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
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	(248661,24270,'PostTitle','Overhaul of the UAE Finance Companies Regulations'),
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	(248663,24270,'PostDate','2018-07-31 17:24:49'),
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	(248681,24272,'PostID','7935'),
	(248682,24272,'PostType','law_update_articles'),
	(248683,24272,'PostTitle','Overhaul of the UAE Finance Companies Regulations'),
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	(248685,24272,'PostDate','2018-07-31 17:24:49'),
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	(248692,24273,'PostID','7935'),
	(248693,24273,'PostTitle','Overhaul of the UAE Finance Companies Regulations'),
	(248694,24273,'PostStatus','draft'),
	(248695,24273,'PostType','law_update_articles'),
	(248696,24273,'PostDate','2018-07-31 17:25:36'),
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	(248700,24273,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-7997\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"736\" height=\"576\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
	(250306,24417,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright size-full wp-image-8021\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/12323.jpg\" alt=\"\" width=\"4272\" height=\"1747\" />A brief history of stadiums</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The origins of stadiums lie in Ancient Greece in the 8th Century BC where a \"stadion’ (or \"stadium\" in its translated Latin form) was a unit of measurement approximately 200 metres in length. The name of stadion referred to both the elongated U-shaped track of the same length and the sprint race that was run along its distance. The tracks were usually surrounded by rudimentary stands that were sometimes built into hillsides or surrounded by artificial embankments of stone steps in order for spectators to view the race.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Romans later advanced the development of stadiums with the \"circus\", which had a similar, open-ended horseshoe shape to the stadion, but which was used for horse and chariot racing. However, the familiar modern day design was really started with the amphitheatre, which could accommodate much larger crowds, was often multi-tiered and wrapped around the often gruesome gladiatorial, venatio (animal hunts) and naumachia (staged naval battles to the death involving condemned prisoners) events put on for mass entertainment in a circle of blood thirsty noise.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">With the fall of the Roman Empire, \"sports\" and their associated facilities also fell into a steep decline during the Middle Ages with the world more pre-occupied with other matters – with jousting being a notable anomaly.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It was not until the late 19th Century, with large scale urbanisation and the huge growth in organised sports such as football, rugby and cricket in the UK and baseball in the United States, that the modern era of the stadium began and which drew upon its ancient roots. Although the sportsmen on the field of play now managed to escape with their lives, football stadiums in the UK, at least, retained much of the \"red in tooth and claw\" atmosphere of their Roman ancestors right up to as recently as the end of the 1980s.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">My own first experience of attending a stadium was as a child with my father in 1987 standing in the Gallowgate End at St James’ Park watching Newcastle United inflict a very rare 2-1 victory over Manchester United. The memories of that day remain very vivid – the pitch, the ear-splitting volume of the chants, the soggy meat pies, watching Gazza do his stuff as a young 19 year-old, Gordon Strachan’s long range equaliser on the stroke of half time (with the ball remaining ominously lodged in the top right stanchion of the goal in front of me for the whole of the half time interval) and Paul Goddard’s 90th minute winner which sent the place ballistic in a primeval frenzy – all of which was simultaneously pretty intoxicating and slightly terrifying for a 10 year old.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As Nick Hornby describes of his first football match in his 1992 novel Fever Pitch, an autobiographical account of his lifelong obsession with Arsenal FC:</p>\r\n<p dir=\"LTR\" align=\"LEFT\">\"All I saw on the day was a bewildering chain of incomprehensible incidents ... I remember the overwhelming maleness of it all – cigar and pipe smoke, foul language ... I’d been to public entertainments before, of course ... but that was different. The audiences I had hithero been a part of had paid to have a good time and, though occasionally one might spot a fidgety child or yawning adult, I hadn’t ever noticed faces contorted by rage or despair or frustration. Entertainment as pain was an idea entirely new to me\".</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, change was afoot. The design of football stadiums and related health and safety legislation in the UK were subject to a massive overhaul following a series of tragedies such as Hillsborough, the Bradford City fire and the Heysel Stadium disaster in the 1980s. Such catastrophes highlighted fatal flaws in stadium design and crowd control at such time. As a result, standing areas were removed from stadiums, which became all-seaters, and an era of much safer, comfortable and more family friendly stadiums was ushered in. The new designs also led to the commercialisation of the stadium with the introduction of hospitality areas and services, acoustics and lighting fit for TV purposes, the hosting of alternative events such as music concerts, and additional commercial facilities such as food and beverage outlets, hotels and conference rooms – all of which increased the frequency and diversity of stadium use.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A view from pitch side</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Talking of Manchester United, I spoke with Dan Schofield, Head of Venue Operations at Old Trafford and self-confessed stadium geek on the current state of play. Dan provided me with the following insights:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"Stadium development is such a hot topic at the moment in the football industry with clubs jostling and jockeying for position in bringing the newest and best developments in the quest for commercial gain, footballing excellence and fan experience. The big challenge for us all is to find the right balance of each of those elements and different clubs have taken differing approaches. Some, such as Liverpool, FC Barcelona and Sheffield United are looking at modernising existing stadiums whilst others, including Tottenham Hotspur, Everton and Chelsea are spending huge amounts on developing completely new stadiums. To justify these huge outlays in capital expenditure clubs are looking to \"sweat the asset\" and stage as many different events and activities as they can in the stadium. If managed well the non-matchday business can be as lucrative as the matchday business.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>If you take a deep-dive in to the new White Hart Lane development, for example, you will see that Spurs have incorporated a skywalk, abseil and a huge Museum experience - all to bolster the non-matchday revenue generating potential of the facility. That is in addition to an average of 27 homes games (across all competitions) and a number of NFL games and concerts which they have contracted to take place. This diversification is always a balancing act between bringing in commercially viable events whilst not impacting on the footballing performance on the pitch. It’s been fascinating to follow the development at Spurs and in particular the retractable pitch they are implementing which will enable them to host NFL games and concerts on an artificial surface whilst the football surface is retracted out of the stadium on a series of mechanical trays, rails and hoists.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>I’m very fortunate that my role heading up the venue operations at Manchester United allows me to visit stadiums all over the world and I make a point of trying to learn something from every venue we visit. I’m particularly looking forward to a trip to Michigan at the end of July where we are playing a pre-season tour game at the 107,000 capacity \"Big House\" stadium. Every stadium you visit is different and having joked about it for years I’ve certainly got enough Stadium based anecdotes to write a book called \"Around the World in 80 Stadiums\" which one day I may well do….. I recently added a new stadium I want to visit to my bucket-list with the Ekaterinburg Arena in Russia in its World Cup guise with its 147 foot high temporary scaffold stands literally outside the stadium with part of the perimeter cut out allowing fans to see the game. You look at photos, scratch your head and question how it’s possible and I’d love to visit and have a proper stomp all over it in person.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>I’m blessed with a fantastic facility in the 75,000 capacity Old Trafford and it’s a fantastic time to be involved in the stadium industry with a number of exciting developments happening all over the world and new ones being announced on an almost weekly basis. I’d recommend for anyone interested in the subject to sign-up to a couple of industry newsletters which help keep you abreast of developments and changes in the global stadium industry, I’d particularly recommend www.stadia-magazine.com and www.sportindustry.biz \"</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8007 \" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/shutterstock_421751620-1024x682.jpg\" alt=\"\" width=\"465\" height=\"310\" />E-gaming stadiums</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As for the future, stadiums will continue to evolve - becoming safer and more technologically sophisticated, diverse in their uses and sustainable; often built with iconic designs (see Qatar 2022) that provide a focal point for cities that are instantly recognisable internationally. They can also help to rejuvenate the economy and attract business in previously run down areas of a city in which they are anchored.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">One example of such evolution in the digital age is with the new phenomena of e-sports stadiums, where professional gamers compete with each other in front of a live audience. Such stadiums are already operational in the United States, China and South Korea and have a huge potential in terms of audience numbers and revenue.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">With a plethora of international standard stadiums already built and construction of the new Dubai Arena well underway, Dubai, ever at the cutting edge of building design and digital technology and soon to be host of EXPO 2020, has also announced the Dubai X-Stadium, a new e-gaming stadium being developed through a joint initiative between Dubai Media Office and TECOM Group.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The features and design of such e-gaming stadiums diverge from traditional stadiums, most notably in that all the action is on huge high definition screens rather than the audience focus being on the competitors, who may be squirreled away in separate booths during play. Use of holographic displays and augmented and virtual reality are also likely to play a significant part in the audience’s experience. Fans are also likely to have a much less sedentary, static relationship with the games – with the freedom to circulate within the stadium and experience other zones and outlets catering to the modern tastes of a new generation - soggy meat pies are likely to be thin on the ground.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Some UAE real estate legal considerations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"We don’t want people to leave the stadium until the game finishes\"</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Jurgen Klopp, manager of Liverpool FC in 2016</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are a number of mixed use, master communities that have a stadium as their focal point or as a prominent feature such as Sports City and Motor City in Dubai, Yas Island in Abu Dhabi and Hazza Bin Zayed Stadium in Al Ain (home of Al Ain F.C).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Developers of such cornerstone plots in such developments will often be granted certain concessions in terms of master community fees in light of the fact that use of such facilities is more intermittent than standard commercial use and that they serve as a key attractor to investors, retailers and third party purchasers of residential property within the master community. Any such concessions should be expressly disclosed to third party purchasers by the master developer prior to the parties entering into a sale and purchase agreement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, although you would think that any such third party purchasers of residential property or commercial tenants would be well aware of potential infringements upon their use and enjoyment of their properties within such a stadium focussed master community, it would also be prudent of master developers to cover off the risk of any nuisance related claims. This may include express wording contained in the relevant master community declaration (which typically purchasers are bound by through the signing of a declaration of adherence upon purchase) or lease whereby a purchaser/tenant acknowledges and waives any claims relating to such matters as traffic congestion, noise and light pollution.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another issue for retail tenants in stadium facilities are conflicts that may arise with the landlord/stadium owner’s sponsors – particularly in relation to special, one off events taking place at the stadium. It is therefore not unusual to find provisions in such leases whereby the landlord reserves rights to impose signage and branding blackouts or restrictions on the sale of goods or services during certain times when a conflict arises with sponsors. This can be a tricky issue and needs to be carefully managed and negotiated up front in the lease. Often with leases where tenants that have a particular connection to the type of sport practised at the stadium, the lease itself may be just a part of a wider commercial deal with the stadium and this may assist with negotiations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Stadiums should also have good standard forms of venue hire agreements and short term kiosk type agreements in place. One issue to be considered is the potential effect of landlord and tenant laws in the UAE on such agreements. Unlike in the UK for example, where the case of Street v Mountford [1985] established that the legal distinction between a lease and an occupational licence is whether or not the tenant enjoys \"exclusive possession\" of the premises, there is no such distinction under UAE law. A short term occupational licence, even if it is described as such on its face and contains express wording that the parties do not intend to create a lease or a relationship of landlord or tenant, is therefore likely to be considered a lease if the question is brought before judicial authorities. This is significant as this will mean that the so called \"licence\" will be subject to landlord and tenant legislation which, in onshore Dubai for example, is generally very tenant friendly in terms of the rights of the landlord to terminate, renewal and security of tenure for tenants. Nevertheless, on a case by case basis depending on the circumstances, certain structuring of the relevant agreement can potentially help to mitigate the risk of it being caught by local landlord and tenant laws.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">...... and there goes the full time whistle.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For further information please contact Ian Arnott (i.arnott@tamimi.com)</p>'),
	(248701,24273,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-7997\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"1118\" height=\"1034\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
	(248702,24273,'MetaLink','content'),
	(248703,24273,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7935&amp;action=edit'),
	(248704,24273,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-7997\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"1118\" height=\"1034\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-7997\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"736\" height=\"576\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
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	(248876,24287,'ReportText','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 size-large alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(248914,24291,'PostDate','2018-07-31 17:31:26'),
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	(248918,24291,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-full wp-image-7996\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/June-July-2018.jpg\" alt=\"\" width=\"1249\" height=\"287\" />Introduction</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">An initial public offering (\"IPO\") is a process by which a company offers its shares, for the first time, to the public by virtue of drafting and publishing a prospectus on the company and carrying out a public subscription of its shares, after submitting required documentation to the relevant governmental authorities and obtaining their approvals in relation thereto.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the laws and regulations of the United Arab Emirates (\"UAE\"), in order for a company to offer its shares to the public, the said company must be or take up the legal form of a public joint stock company. Accordingly, a company wishing to execute an IPO will be either a newly incorporated public joint stock company, or a company assuming the legal form of a private joint stock company or a limited liability company that undergoes a conversion process to become a public joint stock company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Introducing a brief on the history of IPOs in the UAE, there have only been a few IPOs in the past few years, only two of which have been executed in 2017 after the issuance of the new UAE Federal Law No. 2 of 2015 concerning Commercial Companies (\"Companies Law\"). We envisage that, in 2018, the market appetite will uphold the trend of one to two IPOs a year.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is also worth noting in this regard that the companies that have undergone IPOs in the period between 2014 until 2017 operated in fundamental yet diversified industries such as the real estate, investment, leisure and entertainment, and oil and gas sectors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally speaking, companies that choose to go public in the UAE and offer their shares in an IPO usually seek to raise their capital in global markets. This is supported and facilitated by the local regulators and the regulatory schemes set by the governmental authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It should be noted that, for the purposes of this chapter, any reference to the UAE (which includes the Emirates of Abu Dhabi, Dubai and the five other emirates making up the UAE) excludes the geographical areas of the Dubai International Financial Centre (\"DIFC\") and the Abu Dhabi General Market (\"ADGM\"). The civil and commercial laws of the UAE (including the UAE’s securities market laws and regulations discussed in this chapter) are not applicable to the DIFC or ADGM and vice versa.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are three financial exchange markets, two of which are onshore, being the Abu Dhabi Securities Exchange (\"ADX\") and Dubai Financial Market (\"DFM\"), while the third financial market is located within the jurisdiction of the DIFC, being NASDAQ Dubai. ADX and DFM are subject to the supervisory authority of the UAE Securities and Commodities Authority (\"SCA\"), while the Dubai Financial Supervisory Authority regulates NASDAQ Dubai in its capacity as the securities supervisory authority within the DIFC. As at the time of writing, there is no financial market that is located in the ADGM.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><span lang=\"EN\">This chapter excludes any regulations applicable to NASDAQ Dubai and any of the below regulations are applicable only to ADX and DFM where the text allows for the same.</span></p>\r\n<p dir=\"LTR\" align=\"LEFT\">ADX and DFM are governed and regulated by SCA, which has the authority to impose laws, regulations and standards with which both ADX and DFM must comply. ADX and DFM work proactively with SCA to protect investors and provide optimum trading platforms for securities trading.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Both ADX and DFM operate as a securities exchange market for trading securities including shares issued by public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The IPO process: steps, timing and parties and market practice</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite the fact that an IPO is a process carried out in a very similar manner across the globe, the mechanics of such procedure differ from one country to another in terms of the applicable laws and regulations, required documentation, governmental approvals, and timeline of its procedures.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The IPO process in the UAE slightly varies according to the business and structure of the company undergoing the IPO process, i.e. whether the company is a newly established public joint stock company or a company undergoing a conversion process to become a public joint stock company, in which emirate the company has its place of business and on which market the company will be listed. Accordingly, we have set out below two different procedures and series of steps for each company structure as detailed hereunder.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly established public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>First stage: initial approvals</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, greenfield (i.e. newly established) public joint stock companies require additional approvals from SCA to go through the route of the IPO. Some of these requirements include: (i) a special approval from the board of directors of SCA for incorporating the greenfield company; (ii) there is sufficient working capital for the twelve (12) months post the incorporation; and (iii) the offered shares are limited to qualified institutional investors and high-net-worth individuals for amounts that are no less than AED 5 million.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee of the new company (to be established) must refer to the Department of Economic Development (\"DED\") to obtain initial approval to establish the company as a public joint stock company in accordance with the provisions of Article (113) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After obtaining the approval of the DED, the founders committee must apply for the preliminary approval of SCA for the establishment of the public joint stock company, accompanied by all the necessary documents; namely, the memorandum of association (\"MoA\"), articles of association (\"AoA\"), an economic feasibility study for the venture, the SCA application form requesting incorporation of a public joint stock company, a draft prospectus, a subscription application form, and evidence of payment in respect of subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If the company has shares issued in-kind, the value of the in-kind shares will be assessed by one or more financial advisors chosen by SCA from those accredited by it, or those with technical and financial expertise in the subject of evaluation who are approved by SCA. SCA then considers the application for incorporation and notifies the founders committee of its observations within ten (10) working days from the date of submission of the application in full.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee completes any deficiencies or makes the amendments deemed necessary by SCA to complete the application for incorporation within fifteen (15) working days from the date of notification. Otherwise, SCA may consider this a waiver of the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA sends a copy of the documents to the DED after they have been completed. (The period of SCA’s review is ten (10) working days from the date of completing the application.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A meeting is then held between SCA and the DED to study the application for incorporation and its documents. The meeting must be held within ten (10) working days from the date of the submission of documents by SCA to the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In case there are any comments made by the DED, SCA informs the founders committee. The amendments are be made within ten (10) working days from the date of informing the founders committee.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA ensures that the application and all documents and observations are completed and that the amended versions are sent to the DED. No particulars may be amended in the application after submitting it to the DED during any stage of incorporation either in respect of the capital of the company or its objectives or the names of its founders or any other data in the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On approval of the incorporation application, the DED then issues a decision to license the incorporation of the company, which is announced in the official gazette at the expense of the founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Second stage: pre-subscription period</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee attest the MoA and AoA before a notary public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Third stage: public subscription/public offering</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee must then commence the subscription process, as per the template provided by SCA, for the shares within fifteen (15) days from the date of issuance of the above-mentioned decision. The founders shall subscribe for not less than thirty percent (30%) and not more than seventy percent (70%) of the issued capital of the company, prior to the invitation to public subscription and offering for the remaining percentage of the share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">N.B.: Prior to such step, the founders committee must provide SCA and the DED with a bank certificate evidencing payment of the value of their shares in accordance with the above-prescribed percentages. Additionally, they must submit an undertaking, as per the template provided by SCA, to deposit the proceeds generated from the subscription of the total shares to the account of the company under incorporation as well as refunding the surplus funds to subscribers within fifteen (15) days from the date of the subscription closure, if any.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Once SCA’s approval of the prospectus is obtained, the prospectus is then published in two local Arabic daily newspapers at least five (5) days prior to commencement of the subscription. This is the invitation to the public offering.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The subscription must be kept open for no less than ten (10) days and no more than thirty (30) days, open to extension by an additional period of ten (10) days subject to SCA and the DED’s approvals.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A company issuing its shares in accordance with the share book-building mechanism shall enter into a contract with a financial advisor in order to carry out the IPO and for them to supervise the same. Such financial advisor shall have a number of roles, including presenting the company’s business to investors and ultimately setting the price of shares in the final prospectus after analysing the data from the book-building.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Companies issuing shares in an IPO process, and wishing to use the book-building process, must comply with the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">An application will be submitted to SCA using the form prepared for such purpose in order to obtain approval on book-building.</li>\r\n 	<li dir=\"LTR\">The company shall neither announce nor disclose, by any means whatsoever, its intention to issue or sell shares through the book-building process before obtaining SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Not less than twenty percent (20%) of the subscription shares shall be offered to retail investors, and not less than sixty percent (60%) shall be offered to qualified investors, excluding newly established companies, in which case the subscription is restricted to qualified investors only.</li>\r\n 	<li dir=\"LTR\">Allocate to qualified investors, based upon the subscription applications submitted by them, any shares not subscribed by retail investors.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">The price set for retail investors may be discounted compared to the one set for qualified investors in accordance with disclosures made in the final prospectus.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Retail investors shall pay the full value of their subscribed shares upon subscription. Qualified investors may pay the value of their subscribed shares after allocation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The allotment of shares and refund of the surplus funds must be made within five (5) working days from the date of the subscription. In the event that the subscription applications exceed the number of shares offered, the shares shall be distributed to subscribers proportionally to their subscribed amounts or as determined in the prospectus and approved by SCA, and the distribution shall be made to the nearest whole share.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After the allocation has been made, the company must send the shareholders register to the UAE financial market (i.e. ADX or DFM) on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The entities receiving the subscription keep the payments made by subscribers; in this regard any returns gained in relation thereto are for the account of the company under incorporation. The receiving entities will not deliver such amounts to the board of directors until the incorporation certificate has been issued and the company is registered before the commercial registrar at the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fourth stage: incorporation announcement</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company must announce an invitation to the subscribers to attend the constitutive general assembly meeting (after obtaining approval of SCA) to be held within fifteen (15) days from the date of the subscription closure. The agenda of the first constitutive general assembly must include certain matters prescribed by the SCA.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a quorum has not been met at the first meeting, the meeting must be held within five (5) to fifteen (15) days from the date of the first meeting, and the second meeting will be deemed to satisfy the legal quorum regardless of the number of the attendees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Within ten (10) days from the date of the constitutive general assembly, the founders will submit an application to SCA, for issue of the incorporation certificate, and will enclose the documents stipulated under Article (133) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Afterwards, SCA issues the incorporation certificate within five (5) working days.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fifth stage: registration before the competent authorities and SCA</em></p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The board of directors of the newly incorporated company must complete the registration procedures before DED in anticipation of its listing in the financial market within ten (10) days from the date of issuance of the incorporation certificate.</li>\r\n 	<li dir=\"LTR\">The DED must then register the company before the commercial registrar and issue the company’s trade licence within five (5) working days.</li>\r\n 	<li dir=\"LTR\">Afterwards, the chairman of the board of directors of the newly incorporated company must, within five (5) working days from the date of issuance of the company’s trade licence, provide the AoA, MoA and company licence to the company registrar to register the company in the companies register.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Sixth stage: listing on UAE financial markets</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The board of directors of the newly incorporated company must, within fifteen (15) working days from the date of the company’s registration before the commercial registrar, list its shares on any of the UAE financial markets (i.e. ADX or DFM) and revert to such financial market with a listing request in accordance with the listing regulations adopted by SCA and the financial market on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly converted public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Existing companies wishing to convert into public joint stock companies follow the same rules and steps applicable to newly established public joint stock companies except in relation to the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Companies wishing to convert into a public joint stock company are required to fulfil, amongst others, the following requirements:\r\n<ul dir=\"ltr\">\r\n 	<li dir=\"LTR\">the value of the issued shares of the company wishing to convert has been paid in full;</li>\r\n 	<li dir=\"LTR\">the completion of at least two fiscal years prior to the application;</li>\r\n 	<li dir=\"LTR\">the company has realised, within the two financial years preceding the approval on the conversion application, net operational profits that are distributable to shareholders of no less than ten percent (10%) of the company’s capital as an average; and</li>\r\n 	<li dir=\"LTR\">a special resolution (depending on the legal form of the company and its constitutional documents, this should be passed by no less than three quarters of either: (i) the share capital of the company; or (ii) the shares being represented in a general assembly meeting) issued by the shareholders of the company approving its conversion into a public joint stock company.</li>\r\n</ul>\r\n</li>\r\n 	<li dir=\"LTR\">The founders may sell by way of IPO up to thirty percent (30%) of its share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</li>\r\n 	<li dir=\"LTR\">The founders committee (to be established by way of a shareholders’ resolution) of the existing company that wishes to convert to a public joint stock company must draft a letter to SCA requesting a listing window reservation and confirming eligibility.</li>\r\n 	<li dir=\"LTR\">Afterwards, the founders committee applies to SCA for a public joint stock conversion accompanied by its shareholders’ resolution approving such conversion.</li>\r\n 	<li dir=\"LTR\">Simultaneously, the said company appoints, approves and forms the said founders committee.</li>\r\n 	<li dir=\"LTR\">Subsequently, the founders committee files with SCA the first draft of the local prospectus as well as the shareholders’ resolution of the existing company approving the conversion, a final draft of the IPO MoA and AoA, a business plan review, and a final real estate valuation report.</li>\r\n 	<li dir=\"LTR\">SCA will examine the conversion application and filed documents and produce a decision on the request within a period of ten (10) working days.</li>\r\n 	<li dir=\"LTR\">In case of approval of the conversion by SCA, the founders committee must announce the conversion and notify its shareholders and creditors (if any) of such conversion via written notice within a period of five (5) working days from the date of SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Shareholders and/or creditors of the company are given a period of fifteen (15) working days to object to the conversion.</li>\r\n 	<li dir=\"LTR\">Afterwards, the company files with SCA a copy of the resolution and confirmation that the opposition period has expired. SCA forms a committee to evaluate the company assets. The process of this evaluation process is thirty (30) working days.</li>\r\n 	<li dir=\"LTR\">A meeting between SCA and the DED is then held to examine the conversion application and its documents. The time for such procedure is five (5) working days.</li>\r\n 	<li dir=\"LTR\">In case of final approval of the conversion application, SCA issues a licence to the company and such licensing decision is then published in the official gazette at the expense of the company founders.</li>\r\n 	<li dir=\"LTR\">The company then proceeds with the IPO and listing in the same manner as a newly established public joint stock company.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Regulatory architecture: overview of the regulators and key regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The key regulators in the UAE in respect of the IPO process are the Securities and Commodities Authority (SCA) and the Department of Economic Development (DED). Additionally, and depending on the nature of the company’s business, the company may be required to obtain the approval of other relevant governmental authorities or regulators such as the Central Bank or the Insurance Authority in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Other than the key regulators mentioned above and as part of the IPO process, the company is required to liaise with ADX or DFM for the listing of its shares and their offering to the public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the Companies Law, one of the important regulations in respect of an IPO are the Companies Law, and the Chairman of SCA’s Resolution No. (11/R.M.) of 2016 governing public offering and issuance of shares of public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Public company responsibilities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are subject to a more refined governing structure in comparison to other legal forms of companies. The main differences manifest in the ‘corporate governance’ and the ‘disclosure and transparency’ regulations applicable to public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Disclosure and transparency regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Post the IPO, the company and its shareholders have additional disclosure and transparency obligations, which include restrictions on dealing with the securities of the company, notification obligations in relation to material developments affecting the company, restrictions on publishing certain data relating to the company and to provide SCA with copies of certain documents including financial reports, and details of general assemblies and resolutions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Corporate governance regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are obliged to follow separate regulations for corporate governance in addition to those specified in the Companies Law. Such set of corporate governance regulations can be found in SCA’s Resolution No. (7/R.M.) of 2016 concerning the standards of institutional discipline and governance of public joint stock companies (\"CGR\"). These include, amongst other obligations (i) that the company is obliged to obtain approval from its shareholders and maintain records of transactions that take place with related parties, (ii) all shares issued in the company must be in the same class with equal rights attached to them, (iii) the AoA and internal by-laws of the company should include controls to protect shareholders’ rights, and (iv) the company must have internal control systems to ensure compliance with corporate governance rules.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company is also obliged to issue a ‘Corporate Governance Report’, which has to provide details of all remuneration and compensation paid to the board; such report must be available to the shareholders prior to the annual general meeting.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Potential risks, liabilities and pitfalls</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given that the IPO is a simple and straightforward process, there should be no potential legal risks, liabilities or pitfalls with regards to undertaking the IPO process should the above-mentioned procedures be thoroughly followed and all governmental approvals obtained. This is notwithstanding any risks, liabilities and pitfalls related to the business of the company itself or any market risks occurring during the IPO process. However, any negligence on the part of the company or its advisors may expose the company and its founders to risk. The IPO is a lengthy and detailed process that needs to be dealt with by advisors who are experienced in the field of IPOs, in order for them to handle the requirements and ensure compliance with all regulations in an efficient manner and minimise any risk to the company and its founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-7998\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/shutterstock_589011317.jpg\" alt=\"\" width=\"5472\" height=\"2384\" />Acknowledgment</em></p>\r\n<em>The authors would like to thank Sarah Tomy and Anna Robinson for their invaluable assistance in the preparation of this chapter.</em>'),
	(248919,24291,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-full wp-image-7996\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/June-July-2018.jpg\" alt=\"\" width=\"1249\" height=\"287\" />Introduction</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">An initial public offering (\"IPO\") is a process by which a company offers its shares, for the first time, to the public by virtue of drafting and publishing a prospectus on the company and carrying out a public subscription of its shares, after submitting required documentation to the relevant governmental authorities and obtaining their approvals in relation thereto.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the laws and regulations of the United Arab Emirates (\"UAE\"), in order for a company to offer its shares to the public, the said company must be or take up the legal form of a public joint stock company. Accordingly, a company wishing to execute an IPO will be either a newly incorporated public joint stock company, or a company assuming the legal form of a private joint stock company or a limited liability company that undergoes a conversion process to become a public joint stock company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Introducing a brief on the history of IPOs in the UAE, there have only been a few IPOs in the past few years, only two of which have been executed in 2017 after the issuance of the new UAE Federal Law No. 2 of 2015 concerning Commercial Companies (\"Companies Law\"). We envisage that, in 2018, the market appetite will uphold the trend of one to two IPOs a year.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is also worth noting in this regard that the companies that have undergone IPOs in the period between 2014 until 2017 operated in fundamental yet diversified industries such as the real estate, investment, leisure and entertainment, and oil and gas sectors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally speaking, companies that choose to go public in the UAE and offer their shares in an IPO usually seek to raise their capital in global markets. This is supported and facilitated by the local regulators and the regulatory schemes set by the governmental authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It should be noted that, for the purposes of this chapter, any reference to the UAE (which includes the Emirates of Abu Dhabi, Dubai and the five other emirates making up the UAE) excludes the geographical areas of the Dubai International Financial Centre (\"DIFC\") and the Abu Dhabi General Market (\"ADGM\"). The civil and commercial laws of the UAE (including the UAE’s securities market laws and regulations discussed in this chapter) are not applicable to the DIFC or ADGM and vice versa.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are three financial exchange markets, two of which are onshore, being the Abu Dhabi Securities Exchange (\"ADX\") and Dubai Financial Market (\"DFM\"), while the third financial market is located within the jurisdiction of the DIFC, being NASDAQ Dubai. ADX and DFM are subject to the supervisory authority of the UAE Securities and Commodities Authority (\"SCA\"), while the Dubai Financial Supervisory Authority regulates NASDAQ Dubai in its capacity as the securities supervisory authority within the DIFC. As at the time of writing, there is no financial market that is located in the ADGM.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><span lang=\"EN\">This chapter excludes any regulations applicable to NASDAQ Dubai and any of the below regulations are applicable only to ADX and DFM where the text allows for the same.</span></p>\r\n<p dir=\"LTR\" align=\"LEFT\">ADX and DFM are governed and regulated by SCA, which has the authority to impose laws, regulations and standards with which both ADX and DFM must comply. ADX and DFM work proactively with SCA to protect investors and provide optimum trading platforms for securities trading.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Both ADX and DFM operate as a securities exchange market for trading securities including shares issued by public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The IPO process: steps, timing and parties and market practice</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite the fact that an IPO is a process carried out in a very similar manner across the globe, the mechanics of such procedure differ from one country to another in terms of the applicable laws and regulations, required documentation, governmental approvals, and timeline of its procedures.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The IPO process in the UAE slightly varies according to the business and structure of the company undergoing the IPO process, i.e. whether the company is a newly established public joint stock company or a company undergoing a conversion process to become a public joint stock company, in which emirate the company has its place of business and on which market the company will be listed. Accordingly, we have set out below two different procedures and series of steps for each company structure as detailed hereunder.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly established public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>First stage: initial approvals</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, greenfield (i.e. newly established) public joint stock companies require additional approvals from SCA to go through the route of the IPO. Some of these requirements include: (i) a special approval from the board of directors of SCA for incorporating the greenfield company; (ii) there is sufficient working capital for the twelve (12) months post the incorporation; and (iii) the offered shares are limited to qualified institutional investors and high-net-worth individuals for amounts that are no less than AED 5 million.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee of the new company (to be established) must refer to the Department of Economic Development (\"DED\") to obtain initial approval to establish the company as a public joint stock company in accordance with the provisions of Article (113) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After obtaining the approval of the DED, the founders committee must apply for the preliminary approval of SCA for the establishment of the public joint stock company, accompanied by all the necessary documents; namely, the memorandum of association (\"MoA\"), articles of association (\"AoA\"), an economic feasibility study for the venture, the SCA application form requesting incorporation of a public joint stock company, a draft prospectus, a subscription application form, and evidence of payment in respect of subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If the company has shares issued in-kind, the value of the in-kind shares will be assessed by one or more financial advisors chosen by SCA from those accredited by it, or those with technical and financial expertise in the subject of evaluation who are approved by SCA. SCA then considers the application for incorporation and notifies the founders committee of its observations within ten (10) working days from the date of submission of the application in full.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee completes any deficiencies or makes the amendments deemed necessary by SCA to complete the application for incorporation within fifteen (15) working days from the date of notification. Otherwise, SCA may consider this a waiver of the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA sends a copy of the documents to the DED after they have been completed. (The period of SCA’s review is ten (10) working days from the date of completing the application.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A meeting is then held between SCA and the DED to study the application for incorporation and its documents. The meeting must be held within ten (10) working days from the date of the submission of documents by SCA to the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In case there are any comments made by the DED, SCA informs the founders committee. The amendments are be made within ten (10) working days from the date of informing the founders committee.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA ensures that the application and all documents and observations are completed and that the amended versions are sent to the DED. No particulars may be amended in the application after submitting it to the DED during any stage of incorporation either in respect of the capital of the company or its objectives or the names of its founders or any other data in the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On approval of the incorporation application, the DED then issues a decision to license the incorporation of the company, which is announced in the official gazette at the expense of the founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Second stage: pre-subscription period</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee attest the MoA and AoA before a notary public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Third stage: public subscription/public offering</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee must then commence the subscription process, as per the template provided by SCA, for the shares within fifteen (15) days from the date of issuance of the above-mentioned decision. The founders shall subscribe for not less than thirty percent (30%) and not more than seventy percent (70%) of the issued capital of the company, prior to the invitation to public subscription and offering for the remaining percentage of the share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">N.B.: Prior to such step, the founders committee must provide SCA and the DED with a bank certificate evidencing payment of the value of their shares in accordance with the above-prescribed percentages. Additionally, they must submit an undertaking, as per the template provided by SCA, to deposit the proceeds generated from the subscription of the total shares to the account of the company under incorporation as well as refunding the surplus funds to subscribers within fifteen (15) days from the date of the subscription closure, if any.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Once SCA’s approval of the prospectus is obtained, the prospectus is then published in two local Arabic daily newspapers at least five (5) days prior to commencement of the subscription. This is the invitation to the public offering.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The subscription must be kept open for no less than ten (10) days and no more than thirty (30) days, open to extension by an additional period of ten (10) days subject to SCA and the DED’s approvals.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A company issuing its shares in accordance with the share book-building mechanism shall enter into a contract with a financial advisor in order to carry out the IPO and for them to supervise the same. Such financial advisor shall have a number of roles, including presenting the company’s business to investors and ultimately setting the price of shares in the final prospectus after analysing the data from the book-building.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Companies issuing shares in an IPO process, and wishing to use the book-building process, must comply with the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">An application will be submitted to SCA using the form prepared for such purpose in order to obtain approval on book-building.</li>\r\n 	<li dir=\"LTR\">The company shall neither announce nor disclose, by any means whatsoever, its intention to issue or sell shares through the book-building process before obtaining SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Not less than twenty percent (20%) of the subscription shares shall be offered to retail investors, and not less than sixty percent (60%) shall be offered to qualified investors, excluding newly established companies, in which case the subscription is restricted to qualified investors only.</li>\r\n 	<li dir=\"LTR\">Allocate to qualified investors, based upon the subscription applications submitted by them, any shares not subscribed by retail investors.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">The price set for retail investors may be discounted compared to the one set for qualified investors in accordance with disclosures made in the final prospectus.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Retail investors shall pay the full value of their subscribed shares upon subscription. Qualified investors may pay the value of their subscribed shares after allocation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The allotment of shares and refund of the surplus funds must be made within five (5) working days from the date of the subscription. In the event that the subscription applications exceed the number of shares offered, the shares shall be distributed to subscribers proportionally to their subscribed amounts or as determined in the prospectus and approved by SCA, and the distribution shall be made to the nearest whole share.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After the allocation has been made, the company must send the shareholders register to the UAE financial market (i.e. ADX or DFM) on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The entities receiving the subscription keep the payments made by subscribers; in this regard any returns gained in relation thereto are for the account of the company under incorporation. The receiving entities will not deliver such amounts to the board of directors until the incorporation certificate has been issued and the company is registered before the commercial registrar at the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fourth stage: incorporation announcement</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company must announce an invitation to the subscribers to attend the constitutive general assembly meeting (after obtaining approval of SCA) to be held within fifteen (15) days from the date of the subscription closure. The agenda of the first constitutive general assembly must include certain matters prescribed by the SCA.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a quorum has not been met at the first meeting, the meeting must be held within five (5) to fifteen (15) days from the date of the first meeting, and the second meeting will be deemed to satisfy the legal quorum regardless of the number of the attendees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Within ten (10) days from the date of the constitutive general assembly, the founders will submit an application to SCA, for issue of the incorporation certificate, and will enclose the documents stipulated under Article (133) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Afterwards, SCA issues the incorporation certificate within five (5) working days.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fifth stage: registration before the competent authorities and SCA</em></p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The board of directors of the newly incorporated company must complete the registration procedures before DED in anticipation of its listing in the financial market within ten (10) days from the date of issuance of the incorporation certificate.</li>\r\n 	<li dir=\"LTR\">The DED must then register the company before the commercial registrar and issue the company’s trade licence within five (5) working days.</li>\r\n 	<li dir=\"LTR\">Afterwards, the chairman of the board of directors of the newly incorporated company must, within five (5) working days from the date of issuance of the company’s trade licence, provide the AoA, MoA and company licence to the company registrar to register the company in the companies register.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Sixth stage: listing on UAE financial markets</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The board of directors of the newly incorporated company must, within fifteen (15) working days from the date of the company’s registration before the commercial registrar, list its shares on any of the UAE financial markets (i.e. ADX or DFM) and revert to such financial market with a listing request in accordance with the listing regulations adopted by SCA and the financial market on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly converted public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Existing companies wishing to convert into public joint stock companies follow the same rules and steps applicable to newly established public joint stock companies except in relation to the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Companies wishing to convert into a public joint stock company are required to fulfil, amongst others, the following requirements:\r\n<ul dir=\"ltr\">\r\n 	<li dir=\"LTR\">the value of the issued shares of the company wishing to convert has been paid in full;</li>\r\n 	<li dir=\"LTR\">the completion of at least two fiscal years prior to the application;</li>\r\n 	<li dir=\"LTR\">the company has realised, within the two financial years preceding the approval on the conversion application, net operational profits that are distributable to shareholders of no less than ten percent (10%) of the company’s capital as an average; and</li>\r\n 	<li dir=\"LTR\">a special resolution (depending on the legal form of the company and its constitutional documents, this should be passed by no less than three quarters of either: (i) the share capital of the company; or (ii) the shares being represented in a general assembly meeting) issued by the shareholders of the company approving its conversion into a public joint stock company.</li>\r\n</ul>\r\n</li>\r\n 	<li dir=\"LTR\">The founders may sell by way of IPO up to thirty percent (30%) of its share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</li>\r\n 	<li dir=\"LTR\">The founders committee (to be established by way of a shareholders’ resolution) of the existing company that wishes to convert to a public joint stock company must draft a letter to SCA requesting a listing window reservation and confirming eligibility.</li>\r\n 	<li dir=\"LTR\">Afterwards, the founders committee applies to SCA for a public joint stock conversion accompanied by its shareholders’ resolution approving such conversion.</li>\r\n 	<li dir=\"LTR\">Simultaneously, the said company appoints, approves and forms the said founders committee.</li>\r\n 	<li dir=\"LTR\">Subsequently, the founders committee files with SCA the first draft of the local prospectus as well as the shareholders’ resolution of the existing company approving the conversion, a final draft of the IPO MoA and AoA, a business plan review, and a final real estate valuation report.</li>\r\n 	<li dir=\"LTR\">SCA will examine the conversion application and filed documents and produce a decision on the request within a period of ten (10) working days.</li>\r\n 	<li dir=\"LTR\">In case of approval of the conversion by SCA, the founders committee must announce the conversion and notify its shareholders and creditors (if any) of such conversion via written notice within a period of five (5) working days from the date of SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Shareholders and/or creditors of the company are given a period of fifteen (15) working days to object to the conversion.</li>\r\n 	<li dir=\"LTR\">Afterwards, the company files with SCA a copy of the resolution and confirmation that the opposition period has expired. SCA forms a committee to evaluate the company assets. The process of this evaluation process is thirty (30) working days.</li>\r\n 	<li dir=\"LTR\">A meeting between SCA and the DED is then held to examine the conversion application and its documents. The time for such procedure is five (5) working days.</li>\r\n 	<li dir=\"LTR\">In case of final approval of the conversion application, SCA issues a licence to the company and such licensing decision is then published in the official gazette at the expense of the company founders.</li>\r\n 	<li dir=\"LTR\">The company then proceeds with the IPO and listing in the same manner as a newly established public joint stock company.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Regulatory architecture: overview of the regulators and key regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The key regulators in the UAE in respect of the IPO process are the Securities and Commodities Authority (SCA) and the Department of Economic Development (DED). Additionally, and depending on the nature of the company’s business, the company may be required to obtain the approval of other relevant governmental authorities or regulators such as the Central Bank or the Insurance Authority in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Other than the key regulators mentioned above and as part of the IPO process, the company is required to liaise with ADX or DFM for the listing of its shares and their offering to the public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the Companies Law, one of the important regulations in respect of an IPO are the Companies Law, and the Chairman of SCA’s Resolution No. (11/R.M.) of 2016 governing public offering and issuance of shares of public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Public company responsibilities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are subject to a more refined governing structure in comparison to other legal forms of companies. The main differences manifest in the ‘corporate governance’ and the ‘disclosure and transparency’ regulations applicable to public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Disclosure and transparency regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Post the IPO, the company and its shareholders have additional disclosure and transparency obligations, which include restrictions on dealing with the securities of the company, notification obligations in relation to material developments affecting the company, restrictions on publishing certain data relating to the company and to provide SCA with copies of certain documents including financial reports, and details of general assemblies and resolutions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Corporate governance regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are obliged to follow separate regulations for corporate governance in addition to those specified in the Companies Law. Such set of corporate governance regulations can be found in SCA’s Resolution No. (7/R.M.) of 2016 concerning the standards of institutional discipline and governance of public joint stock companies (\"CGR\"). These include, amongst other obligations (i) that the company is obliged to obtain approval from its shareholders and maintain records of transactions that take place with related parties, (ii) all shares issued in the company must be in the same class with equal rights attached to them, (iii) the AoA and internal by-laws of the company should include controls to protect shareholders’ rights, and (iv) the company must have internal control systems to ensure compliance with corporate governance rules.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company is also obliged to issue a ‘Corporate Governance Report’, which has to provide details of all remuneration and compensation paid to the board; such report must be available to the shareholders prior to the annual general meeting.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Potential risks, liabilities and pitfalls</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given that the IPO is a simple and straightforward process, there should be no potential legal risks, liabilities or pitfalls with regards to undertaking the IPO process should the above-mentioned procedures be thoroughly followed and all governmental approvals obtained. This is notwithstanding any risks, liabilities and pitfalls related to the business of the company itself or any market risks occurring during the IPO process. However, any negligence on the part of the company or its advisors may expose the company and its founders to risk. The IPO is a lengthy and detailed process that needs to be dealt with by advisors who are experienced in the field of IPOs, in order for them to handle the requirements and ensure compliance with all regulations in an efficient manner and minimise any risk to the company and its founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Acknowledgment</em></p>\r\n<em>The authors would like to thank Sarah Tomy and Anna Robinson for their invaluable assistance in the preparation of this chapter.</em>'),
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	(247597,24177,'MetaValueNew','The Federal Tax Authority (“<strong>FTA</strong>”) has recently issued a new public clarification to explain the recoverability of input VAT on entertainment expenses. They have also published a guide to provide guidance to businesses operating in designated zones (“<strong>DZs</strong>”) on the VAT treatment of their activities within and outside the DZs.\r\n\r\n<strong>1.     The Clarification</strong>\r\n\r\nIn the Public Clarification VAT P005 (“<strong>Clarification</strong>”), the FTA confirms that where the costs are incurred for a genuine business purpose or are incidental to such a purpose, VAT will be recoverable. However, where the hospitality becomes an end in itself and becomes the main purpose for attending an event, this would be regarded as entertainment and consequently any VAT incurred on such costs would not be recoverable.\r\n\r\nThe Clarification also provides detailed criteria to enable businesses to ascertain the circumstances in which costs would be incurred for a genuine business purpose or incidental to such a purpose, or considered to be an end in themselves.\r\n\r\nExamples of costs which are considered to be incurred for a genuine business purpose or are incidental to such a purpose include:\r\n<ul>\r\n 	<li>catering services for conferences where a fee is charged;</li>\r\n 	<li>food and drinks purchased by an employee for own consumption during a business trip; and</li>\r\n 	<li>sundry office expenses such as tea and coffee supplies or flowers for display in offices.</li>\r\n</ul>\r\nExamples of costs incurred for entertainment services which constitute an end in itself include:\r\n<ul>\r\n 	<li>gala dinners for no charge;</li>\r\n 	<li>Ramadan Iftars; and</li>\r\n 	<li>staff parties.</li>\r\n</ul>\r\n<strong>2.     VAT Guide on DZs</strong>\r\n\r\nUnder the VAT Guide on DZs, the FTA confirmed the VAT treatment applicable to businesses operating in DZs as provided for in the VAT law and related executive regulations and clarified the VAT treatment of supplies in specific cases where there was previously some uncertainty. The key takeaways are as follows:\r\n<ul>\r\n 	<li>the FTA have clarified that the movement of goods from a designated zone into the UAE mainland will be treated as an import of goods into the UAE and the importer would be required to account for VAT on the import of the goods;</li>\r\n 	<li>the FTA have indicated that supply of goods from a business established in a designated zone to outside the UAE will be outside the scope of VAT rather than zero rated for VAT purposes as had been assumed by some businesses;</li>\r\n 	<li>the place of supply of water and energy for the purpose of consumption is treated as being within the UAE even if it is used in the process of production of other goods in the designated zone; and</li>\r\n 	<li>the FTA have reiterated that, for the purpose of the designated zones rules, real estate is not treated as consumed when sold or leased within a designated zone and accordingly such supplies of real estate are outside the scope of VAT. However, the supply of real estate other than by way of sale or lease (e.g. the right to use hotel accommodation) will be treated as a supply of services related to real estate and subject to VAT in the normal way.</li>\r\n</ul>\r\n<strong>What should you do next?</strong>\r\n<strong>\r\n</strong>Businesses should consider the implications of this Clarification on their transactions to ensure that the correct amount of input VAT is being recovered. Further, businesses should understand the impact of the VAT Guide on DZs on their business operations within and outside DZs and continuously ensure that the correct VAT treatment is being applied to its transactions.\r\n\r\n<strong>How can we help?</strong>\r\n\r\nAl Tamimi can assist you to assess the impact of this Clarification and the VAT Guide on DZs, and advise you on the recoverability of input VAT and VAT treatment of transactions involving entities operating in DZs.\r\n\r\nPlease do not hesitate to contact <strong><a href=\"http://localhost:8888/tamimi/our-firm/find-a-lawyer/?searchPractice=651\">Al Tamimi’s Tax Team</a></strong> if you require any assistance.'),
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	(248922,24291,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-full wp-image-7996\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/June-July-2018.jpg\" alt=\"\" width=\"1249\" height=\"287\" />Introduction</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">An initial public offering (\"IPO\") is a process by which a company offers its shares, for the first time, to the public by virtue of drafting and publishing a prospectus on the company and carrying out a public subscription of its shares, after submitting required documentation to the relevant governmental authorities and obtaining their approvals in relation thereto.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the laws and regulations of the United Arab Emirates (\"UAE\"), in order for a company to offer its shares to the public, the said company must be or take up the legal form of a public joint stock company. Accordingly, a company wishing to execute an IPO will be either a newly incorporated public joint stock company, or a company assuming the legal form of a private joint stock company or a limited liability company that undergoes a conversion process to become a public joint stock company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Introducing a brief on the history of IPOs in the UAE, there have only been a few IPOs in the past few years, only two of which have been executed in 2017 after the issuance of the new UAE Federal Law No. 2 of 2015 concerning Commercial Companies (\"Companies Law\"). We envisage that, in 2018, the market appetite will uphold the trend of one to two IPOs a year.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is also worth noting in this regard that the companies that have undergone IPOs in the period between 2014 until 2017 operated in fundamental yet diversified industries such as the real estate, investment, leisure and entertainment, and oil and gas sectors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally speaking, companies that choose to go public in the UAE and offer their shares in an IPO usually seek to raise their capital in global markets. This is supported and facilitated by the local regulators and the regulatory schemes set by the governmental authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It should be noted that, for the purposes of this chapter, any reference to the UAE (which includes the Emirates of Abu Dhabi, Dubai and the five other emirates making up the UAE) excludes the geographical areas of the Dubai International Financial Centre (\"DIFC\") and the Abu Dhabi General Market (\"ADGM\"). The civil and commercial laws of the UAE (including the UAE’s securities market laws and regulations discussed in this chapter) are not applicable to the DIFC or ADGM and vice versa.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are three financial exchange markets, two of which are onshore, being the Abu Dhabi Securities Exchange (\"ADX\") and Dubai Financial Market (\"DFM\"), while the third financial market is located within the jurisdiction of the DIFC, being NASDAQ Dubai. ADX and DFM are subject to the supervisory authority of the UAE Securities and Commodities Authority (\"SCA\"), while the Dubai Financial Supervisory Authority regulates NASDAQ Dubai in its capacity as the securities supervisory authority within the DIFC. As at the time of writing, there is no financial market that is located in the ADGM.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><span lang=\"EN\">This chapter excludes any regulations applicable to NASDAQ Dubai and any of the below regulations are applicable only to ADX and DFM where the text allows for the same.</span></p>\r\n<p dir=\"LTR\" align=\"LEFT\">ADX and DFM are governed and regulated by SCA, which has the authority to impose laws, regulations and standards with which both ADX and DFM must comply. ADX and DFM work proactively with SCA to protect investors and provide optimum trading platforms for securities trading.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Both ADX and DFM operate as a securities exchange market for trading securities including shares issued by public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The IPO process: steps, timing and parties and market practice</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite the fact that an IPO is a process carried out in a very similar manner across the globe, the mechanics of such procedure differ from one country to another in terms of the applicable laws and regulations, required documentation, governmental approvals, and timeline of its procedures.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The IPO process in the UAE slightly varies according to the business and structure of the company undergoing the IPO process, i.e. whether the company is a newly established public joint stock company or a company undergoing a conversion process to become a public joint stock company, in which emirate the company has its place of business and on which market the company will be listed. Accordingly, we have set out below two different procedures and series of steps for each company structure as detailed hereunder.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly established public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>First stage: initial approvals</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, greenfield (i.e. newly established) public joint stock companies require additional approvals from SCA to go through the route of the IPO. Some of these requirements include: (i) a special approval from the board of directors of SCA for incorporating the greenfield company; (ii) there is sufficient working capital for the twelve (12) months post the incorporation; and (iii) the offered shares are limited to qualified institutional investors and high-net-worth individuals for amounts that are no less than AED 5 million.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee of the new company (to be established) must refer to the Department of Economic Development (\"DED\") to obtain initial approval to establish the company as a public joint stock company in accordance with the provisions of Article (113) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After obtaining the approval of the DED, the founders committee must apply for the preliminary approval of SCA for the establishment of the public joint stock company, accompanied by all the necessary documents; namely, the memorandum of association (\"MoA\"), articles of association (\"AoA\"), an economic feasibility study for the venture, the SCA application form requesting incorporation of a public joint stock company, a draft prospectus, a subscription application form, and evidence of payment in respect of subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If the company has shares issued in-kind, the value of the in-kind shares will be assessed by one or more financial advisors chosen by SCA from those accredited by it, or those with technical and financial expertise in the subject of evaluation who are approved by SCA. SCA then considers the application for incorporation and notifies the founders committee of its observations within ten (10) working days from the date of submission of the application in full.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee completes any deficiencies or makes the amendments deemed necessary by SCA to complete the application for incorporation within fifteen (15) working days from the date of notification. Otherwise, SCA may consider this a waiver of the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA sends a copy of the documents to the DED after they have been completed. (The period of SCA’s review is ten (10) working days from the date of completing the application.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A meeting is then held between SCA and the DED to study the application for incorporation and its documents. The meeting must be held within ten (10) working days from the date of the submission of documents by SCA to the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In case there are any comments made by the DED, SCA informs the founders committee. The amendments are be made within ten (10) working days from the date of informing the founders committee.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA ensures that the application and all documents and observations are completed and that the amended versions are sent to the DED. No particulars may be amended in the application after submitting it to the DED during any stage of incorporation either in respect of the capital of the company or its objectives or the names of its founders or any other data in the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On approval of the incorporation application, the DED then issues a decision to license the incorporation of the company, which is announced in the official gazette at the expense of the founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Second stage: pre-subscription period</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee attest the MoA and AoA before a notary public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Third stage: public subscription/public offering</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee must then commence the subscription process, as per the template provided by SCA, for the shares within fifteen (15) days from the date of issuance of the above-mentioned decision. The founders shall subscribe for not less than thirty percent (30%) and not more than seventy percent (70%) of the issued capital of the company, prior to the invitation to public subscription and offering for the remaining percentage of the share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">N.B.: Prior to such step, the founders committee must provide SCA and the DED with a bank certificate evidencing payment of the value of their shares in accordance with the above-prescribed percentages. Additionally, they must submit an undertaking, as per the template provided by SCA, to deposit the proceeds generated from the subscription of the total shares to the account of the company under incorporation as well as refunding the surplus funds to subscribers within fifteen (15) days from the date of the subscription closure, if any.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Once SCA’s approval of the prospectus is obtained, the prospectus is then published in two local Arabic daily newspapers at least five (5) days prior to commencement of the subscription. This is the invitation to the public offering.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The subscription must be kept open for no less than ten (10) days and no more than thirty (30) days, open to extension by an additional period of ten (10) days subject to SCA and the DED’s approvals.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A company issuing its shares in accordance with the share book-building mechanism shall enter into a contract with a financial advisor in order to carry out the IPO and for them to supervise the same. Such financial advisor shall have a number of roles, including presenting the company’s business to investors and ultimately setting the price of shares in the final prospectus after analysing the data from the book-building.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Companies issuing shares in an IPO process, and wishing to use the book-building process, must comply with the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">An application will be submitted to SCA using the form prepared for such purpose in order to obtain approval on book-building.</li>\r\n 	<li dir=\"LTR\">The company shall neither announce nor disclose, by any means whatsoever, its intention to issue or sell shares through the book-building process before obtaining SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Not less than twenty percent (20%) of the subscription shares shall be offered to retail investors, and not less than sixty percent (60%) shall be offered to qualified investors, excluding newly established companies, in which case the subscription is restricted to qualified investors only.</li>\r\n 	<li dir=\"LTR\">Allocate to qualified investors, based upon the subscription applications submitted by them, any shares not subscribed by retail investors.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">The price set for retail investors may be discounted compared to the one set for qualified investors in accordance with disclosures made in the final prospectus.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Retail investors shall pay the full value of their subscribed shares upon subscription. Qualified investors may pay the value of their subscribed shares after allocation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The allotment of shares and refund of the surplus funds must be made within five (5) working days from the date of the subscription. In the event that the subscription applications exceed the number of shares offered, the shares shall be distributed to subscribers proportionally to their subscribed amounts or as determined in the prospectus and approved by SCA, and the distribution shall be made to the nearest whole share.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After the allocation has been made, the company must send the shareholders register to the UAE financial market (i.e. ADX or DFM) on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The entities receiving the subscription keep the payments made by subscribers; in this regard any returns gained in relation thereto are for the account of the company under incorporation. The receiving entities will not deliver such amounts to the board of directors until the incorporation certificate has been issued and the company is registered before the commercial registrar at the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fourth stage: incorporation announcement</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company must announce an invitation to the subscribers to attend the constitutive general assembly meeting (after obtaining approval of SCA) to be held within fifteen (15) days from the date of the subscription closure. The agenda of the first constitutive general assembly must include certain matters prescribed by the SCA.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a quorum has not been met at the first meeting, the meeting must be held within five (5) to fifteen (15) days from the date of the first meeting, and the second meeting will be deemed to satisfy the legal quorum regardless of the number of the attendees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Within ten (10) days from the date of the constitutive general assembly, the founders will submit an application to SCA, for issue of the incorporation certificate, and will enclose the documents stipulated under Article (133) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Afterwards, SCA issues the incorporation certificate within five (5) working days.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fifth stage: registration before the competent authorities and SCA</em></p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The board of directors of the newly incorporated company must complete the registration procedures before DED in anticipation of its listing in the financial market within ten (10) days from the date of issuance of the incorporation certificate.</li>\r\n 	<li dir=\"LTR\">The DED must then register the company before the commercial registrar and issue the company’s trade licence within five (5) working days.</li>\r\n 	<li dir=\"LTR\">Afterwards, the chairman of the board of directors of the newly incorporated company must, within five (5) working days from the date of issuance of the company’s trade licence, provide the AoA, MoA and company licence to the company registrar to register the company in the companies register.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Sixth stage: listing on UAE financial markets</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The board of directors of the newly incorporated company must, within fifteen (15) working days from the date of the company’s registration before the commercial registrar, list its shares on any of the UAE financial markets (i.e. ADX or DFM) and revert to such financial market with a listing request in accordance with the listing regulations adopted by SCA and the financial market on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly converted public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Existing companies wishing to convert into public joint stock companies follow the same rules and steps applicable to newly established public joint stock companies except in relation to the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Companies wishing to convert into a public joint stock company are required to fulfil, amongst others, the following requirements:\r\n<ul dir=\"ltr\">\r\n 	<li dir=\"LTR\">the value of the issued shares of the company wishing to convert has been paid in full;</li>\r\n 	<li dir=\"LTR\">the completion of at least two fiscal years prior to the application;</li>\r\n 	<li dir=\"LTR\">the company has realised, within the two financial years preceding the approval on the conversion application, net operational profits that are distributable to shareholders of no less than ten percent (10%) of the company’s capital as an average; and</li>\r\n 	<li dir=\"LTR\">a special resolution (depending on the legal form of the company and its constitutional documents, this should be passed by no less than three quarters of either: (i) the share capital of the company; or (ii) the shares being represented in a general assembly meeting) issued by the shareholders of the company approving its conversion into a public joint stock company.</li>\r\n</ul>\r\n</li>\r\n 	<li dir=\"LTR\">The founders may sell by way of IPO up to thirty percent (30%) of its share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</li>\r\n 	<li dir=\"LTR\">The founders committee (to be established by way of a shareholders’ resolution) of the existing company that wishes to convert to a public joint stock company must draft a letter to SCA requesting a listing window reservation and confirming eligibility.</li>\r\n 	<li dir=\"LTR\">Afterwards, the founders committee applies to SCA for a public joint stock conversion accompanied by its shareholders’ resolution approving such conversion.</li>\r\n 	<li dir=\"LTR\">Simultaneously, the said company appoints, approves and forms the said founders committee.</li>\r\n 	<li dir=\"LTR\">Subsequently, the founders committee files with SCA the first draft of the local prospectus as well as the shareholders’ resolution of the existing company approving the conversion, a final draft of the IPO MoA and AoA, a business plan review, and a final real estate valuation report.</li>\r\n 	<li dir=\"LTR\">SCA will examine the conversion application and filed documents and produce a decision on the request within a period of ten (10) working days.</li>\r\n 	<li dir=\"LTR\">In case of approval of the conversion by SCA, the founders committee must announce the conversion and notify its shareholders and creditors (if any) of such conversion via written notice within a period of five (5) working days from the date of SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Shareholders and/or creditors of the company are given a period of fifteen (15) working days to object to the conversion.</li>\r\n 	<li dir=\"LTR\">Afterwards, the company files with SCA a copy of the resolution and confirmation that the opposition period has expired. SCA forms a committee to evaluate the company assets. The process of this evaluation process is thirty (30) working days.</li>\r\n 	<li dir=\"LTR\">A meeting between SCA and the DED is then held to examine the conversion application and its documents. The time for such procedure is five (5) working days.</li>\r\n 	<li dir=\"LTR\">In case of final approval of the conversion application, SCA issues a licence to the company and such licensing decision is then published in the official gazette at the expense of the company founders.</li>\r\n 	<li dir=\"LTR\">The company then proceeds with the IPO and listing in the same manner as a newly established public joint stock company.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Regulatory architecture: overview of the regulators and key regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The key regulators in the UAE in respect of the IPO process are the Securities and Commodities Authority (SCA) and the Department of Economic Development (DED). Additionally, and depending on the nature of the company’s business, the company may be required to obtain the approval of other relevant governmental authorities or regulators such as the Central Bank or the Insurance Authority in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Other than the key regulators mentioned above and as part of the IPO process, the company is required to liaise with ADX or DFM for the listing of its shares and their offering to the public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the Companies Law, one of the important regulations in respect of an IPO are the Companies Law, and the Chairman of SCA’s Resolution No. (11/R.M.) of 2016 governing public offering and issuance of shares of public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Public company responsibilities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are subject to a more refined governing structure in comparison to other legal forms of companies. The main differences manifest in the ‘corporate governance’ and the ‘disclosure and transparency’ regulations applicable to public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Disclosure and transparency regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Post the IPO, the company and its shareholders have additional disclosure and transparency obligations, which include restrictions on dealing with the securities of the company, notification obligations in relation to material developments affecting the company, restrictions on publishing certain data relating to the company and to provide SCA with copies of certain documents including financial reports, and details of general assemblies and resolutions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Corporate governance regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are obliged to follow separate regulations for corporate governance in addition to those specified in the Companies Law. Such set of corporate governance regulations can be found in SCA’s Resolution No. (7/R.M.) of 2016 concerning the standards of institutional discipline and governance of public joint stock companies (\"CGR\"). These include, amongst other obligations (i) that the company is obliged to obtain approval from its shareholders and maintain records of transactions that take place with related parties, (ii) all shares issued in the company must be in the same class with equal rights attached to them, (iii) the AoA and internal by-laws of the company should include controls to protect shareholders’ rights, and (iv) the company must have internal control systems to ensure compliance with corporate governance rules.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company is also obliged to issue a ‘Corporate Governance Report’, which has to provide details of all remuneration and compensation paid to the board; such report must be available to the shareholders prior to the annual general meeting.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Potential risks, liabilities and pitfalls</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given that the IPO is a simple and straightforward process, there should be no potential legal risks, liabilities or pitfalls with regards to undertaking the IPO process should the above-mentioned procedures be thoroughly followed and all governmental approvals obtained. This is notwithstanding any risks, liabilities and pitfalls related to the business of the company itself or any market risks occurring during the IPO process. However, any negligence on the part of the company or its advisors may expose the company and its founders to risk. The IPO is a lengthy and detailed process that needs to be dealt with by advisors who are experienced in the field of IPOs, in order for them to handle the requirements and ensure compliance with all regulations in an efficient manner and minimise any risk to the company and its founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Acknowledgment</em></p>\r\n<em>The authors would like to thank Sarah Tomy and Anna Robinson for their invaluable assistance in the preparation of this chapter.</em>|<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-full wp-image-7996\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/June-July-2018.jpg\" alt=\"\" width=\"1249\" height=\"287\" />Introduction</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">An initial public offering (\"IPO\") is a process by which a company offers its shares, for the first time, to the public by virtue of drafting and publishing a prospectus on the company and carrying out a public subscription of its shares, after submitting required documentation to the relevant governmental authorities and obtaining their approvals in relation thereto.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the laws and regulations of the United Arab Emirates (\"UAE\"), in order for a company to offer its shares to the public, the said company must be or take up the legal form of a public joint stock company. Accordingly, a company wishing to execute an IPO will be either a newly incorporated public joint stock company, or a company assuming the legal form of a private joint stock company or a limited liability company that undergoes a conversion process to become a public joint stock company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Introducing a brief on the history of IPOs in the UAE, there have only been a few IPOs in the past few years, only two of which have been executed in 2017 after the issuance of the new UAE Federal Law No. 2 of 2015 concerning Commercial Companies (\"Companies Law\"). We envisage that, in 2018, the market appetite will uphold the trend of one to two IPOs a year.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is also worth noting in this regard that the companies that have undergone IPOs in the period between 2014 until 2017 operated in fundamental yet diversified industries such as the real estate, investment, leisure and entertainment, and oil and gas sectors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally speaking, companies that choose to go public in the UAE and offer their shares in an IPO usually seek to raise their capital in global markets. This is supported and facilitated by the local regulators and the regulatory schemes set by the governmental authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It should be noted that, for the purposes of this chapter, any reference to the UAE (which includes the Emirates of Abu Dhabi, Dubai and the five other emirates making up the UAE) excludes the geographical areas of the Dubai International Financial Centre (\"DIFC\") and the Abu Dhabi General Market (\"ADGM\"). The civil and commercial laws of the UAE (including the UAE’s securities market laws and regulations discussed in this chapter) are not applicable to the DIFC or ADGM and vice versa.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are three financial exchange markets, two of which are onshore, being the Abu Dhabi Securities Exchange (\"ADX\") and Dubai Financial Market (\"DFM\"), while the third financial market is located within the jurisdiction of the DIFC, being NASDAQ Dubai. ADX and DFM are subject to the supervisory authority of the UAE Securities and Commodities Authority (\"SCA\"), while the Dubai Financial Supervisory Authority regulates NASDAQ Dubai in its capacity as the securities supervisory authority within the DIFC. As at the time of writing, there is no financial market that is located in the ADGM.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><span lang=\"EN\">This chapter excludes any regulations applicable to NASDAQ Dubai and any of the below regulations are applicable only to ADX and DFM where the text allows for the same.</span></p>\r\n<p dir=\"LTR\" align=\"LEFT\">ADX and DFM are governed and regulated by SCA, which has the authority to impose laws, regulations and standards with which both ADX and DFM must comply. ADX and DFM work proactively with SCA to protect investors and provide optimum trading platforms for securities trading.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Both ADX and DFM operate as a securities exchange market for trading securities including shares issued by public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The IPO process: steps, timing and parties and market practice</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite the fact that an IPO is a process carried out in a very similar manner across the globe, the mechanics of such procedure differ from one country to another in terms of the applicable laws and regulations, required documentation, governmental approvals, and timeline of its procedures.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The IPO process in the UAE slightly varies according to the business and structure of the company undergoing the IPO process, i.e. whether the company is a newly established public joint stock company or a company undergoing a conversion process to become a public joint stock company, in which emirate the company has its place of business and on which market the company will be listed. Accordingly, we have set out below two different procedures and series of steps for each company structure as detailed hereunder.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly established public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>First stage: initial approvals</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, greenfield (i.e. newly established) public joint stock companies require additional approvals from SCA to go through the route of the IPO. Some of these requirements include: (i) a special approval from the board of directors of SCA for incorporating the greenfield company; (ii) there is sufficient working capital for the twelve (12) months post the incorporation; and (iii) the offered shares are limited to qualified institutional investors and high-net-worth individuals for amounts that are no less than AED 5 million.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee of the new company (to be established) must refer to the Department of Economic Development (\"DED\") to obtain initial approval to establish the company as a public joint stock company in accordance with the provisions of Article (113) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After obtaining the approval of the DED, the founders committee must apply for the preliminary approval of SCA for the establishment of the public joint stock company, accompanied by all the necessary documents; namely, the memorandum of association (\"MoA\"), articles of association (\"AoA\"), an economic feasibility study for the venture, the SCA application form requesting incorporation of a public joint stock company, a draft prospectus, a subscription application form, and evidence of payment in respect of subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If the company has shares issued in-kind, the value of the in-kind shares will be assessed by one or more financial advisors chosen by SCA from those accredited by it, or those with technical and financial expertise in the subject of evaluation who are approved by SCA. SCA then considers the application for incorporation and notifies the founders committee of its observations within ten (10) working days from the date of submission of the application in full.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee completes any deficiencies or makes the amendments deemed necessary by SCA to complete the application for incorporation within fifteen (15) working days from the date of notification. Otherwise, SCA may consider this a waiver of the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA sends a copy of the documents to the DED after they have been completed. (The period of SCA’s review is ten (10) working days from the date of completing the application.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A meeting is then held between SCA and the DED to study the application for incorporation and its documents. The meeting must be held within ten (10) working days from the date of the submission of documents by SCA to the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In case there are any comments made by the DED, SCA informs the founders committee. The amendments are be made within ten (10) working days from the date of informing the founders committee.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA ensures that the application and all documents and observations are completed and that the amended versions are sent to the DED. No particulars may be amended in the application after submitting it to the DED during any stage of incorporation either in respect of the capital of the company or its objectives or the names of its founders or any other data in the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On approval of the incorporation application, the DED then issues a decision to license the incorporation of the company, which is announced in the official gazette at the expense of the founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Second stage: pre-subscription period</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee attest the MoA and AoA before a notary public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Third stage: public subscription/public offering</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee must then commence the subscription process, as per the template provided by SCA, for the shares within fifteen (15) days from the date of issuance of the above-mentioned decision. The founders shall subscribe for not less than thirty percent (30%) and not more than seventy percent (70%) of the issued capital of the company, prior to the invitation to public subscription and offering for the remaining percentage of the share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">N.B.: Prior to such step, the founders committee must provide SCA and the DED with a bank certificate evidencing payment of the value of their shares in accordance with the above-prescribed percentages. Additionally, they must submit an undertaking, as per the template provided by SCA, to deposit the proceeds generated from the subscription of the total shares to the account of the company under incorporation as well as refunding the surplus funds to subscribers within fifteen (15) days from the date of the subscription closure, if any.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Once SCA’s approval of the prospectus is obtained, the prospectus is then published in two local Arabic daily newspapers at least five (5) days prior to commencement of the subscription. This is the invitation to the public offering.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The subscription must be kept open for no less than ten (10) days and no more than thirty (30) days, open to extension by an additional period of ten (10) days subject to SCA and the DED’s approvals.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A company issuing its shares in accordance with the share book-building mechanism shall enter into a contract with a financial advisor in order to carry out the IPO and for them to supervise the same. Such financial advisor shall have a number of roles, including presenting the company’s business to investors and ultimately setting the price of shares in the final prospectus after analysing the data from the book-building.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Companies issuing shares in an IPO process, and wishing to use the book-building process, must comply with the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">An application will be submitted to SCA using the form prepared for such purpose in order to obtain approval on book-building.</li>\r\n 	<li dir=\"LTR\">The company shall neither announce nor disclose, by any means whatsoever, its intention to issue or sell shares through the book-building process before obtaining SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Not less than twenty percent (20%) of the subscription shares shall be offered to retail investors, and not less than sixty percent (60%) shall be offered to qualified investors, excluding newly established companies, in which case the subscription is restricted to qualified investors only.</li>\r\n 	<li dir=\"LTR\">Allocate to qualified investors, based upon the subscription applications submitted by them, any shares not subscribed by retail investors.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">The price set for retail investors may be discounted compared to the one set for qualified investors in accordance with disclosures made in the final prospectus.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Retail investors shall pay the full value of their subscribed shares upon subscription. Qualified investors may pay the value of their subscribed shares after allocation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The allotment of shares and refund of the surplus funds must be made within five (5) working days from the date of the subscription. In the event that the subscription applications exceed the number of shares offered, the shares shall be distributed to subscribers proportionally to their subscribed amounts or as determined in the prospectus and approved by SCA, and the distribution shall be made to the nearest whole share.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After the allocation has been made, the company must send the shareholders register to the UAE financial market (i.e. ADX or DFM) on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The entities receiving the subscription keep the payments made by subscribers; in this regard any returns gained in relation thereto are for the account of the company under incorporation. The receiving entities will not deliver such amounts to the board of directors until the incorporation certificate has been issued and the company is registered before the commercial registrar at the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fourth stage: incorporation announcement</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company must announce an invitation to the subscribers to attend the constitutive general assembly meeting (after obtaining approval of SCA) to be held within fifteen (15) days from the date of the subscription closure. The agenda of the first constitutive general assembly must include certain matters prescribed by the SCA.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a quorum has not been met at the first meeting, the meeting must be held within five (5) to fifteen (15) days from the date of the first meeting, and the second meeting will be deemed to satisfy the legal quorum regardless of the number of the attendees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Within ten (10) days from the date of the constitutive general assembly, the founders will submit an application to SCA, for issue of the incorporation certificate, and will enclose the documents stipulated under Article (133) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Afterwards, SCA issues the incorporation certificate within five (5) working days.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fifth stage: registration before the competent authorities and SCA</em></p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The board of directors of the newly incorporated company must complete the registration procedures before DED in anticipation of its listing in the financial market within ten (10) days from the date of issuance of the incorporation certificate.</li>\r\n 	<li dir=\"LTR\">The DED must then register the company before the commercial registrar and issue the company’s trade licence within five (5) working days.</li>\r\n 	<li dir=\"LTR\">Afterwards, the chairman of the board of directors of the newly incorporated company must, within five (5) working days from the date of issuance of the company’s trade licence, provide the AoA, MoA and company licence to the company registrar to register the company in the companies register.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Sixth stage: listing on UAE financial markets</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The board of directors of the newly incorporated company must, within fifteen (15) working days from the date of the company’s registration before the commercial registrar, list its shares on any of the UAE financial markets (i.e. ADX or DFM) and revert to such financial market with a listing request in accordance with the listing regulations adopted by SCA and the financial market on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly converted public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Existing companies wishing to convert into public joint stock companies follow the same rules and steps applicable to newly established public joint stock companies except in relation to the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Companies wishing to convert into a public joint stock company are required to fulfil, amongst others, the following requirements:\r\n<ul dir=\"ltr\">\r\n 	<li dir=\"LTR\">the value of the issued shares of the company wishing to convert has been paid in full;</li>\r\n 	<li dir=\"LTR\">the completion of at least two fiscal years prior to the application;</li>\r\n 	<li dir=\"LTR\">the company has realised, within the two financial years preceding the approval on the conversion application, net operational profits that are distributable to shareholders of no less than ten percent (10%) of the company’s capital as an average; and</li>\r\n 	<li dir=\"LTR\">a special resolution (depending on the legal form of the company and its constitutional documents, this should be passed by no less than three quarters of either: (i) the share capital of the company; or (ii) the shares being represented in a general assembly meeting) issued by the shareholders of the company approving its conversion into a public joint stock company.</li>\r\n</ul>\r\n</li>\r\n 	<li dir=\"LTR\">The founders may sell by way of IPO up to thirty percent (30%) of its share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</li>\r\n 	<li dir=\"LTR\">The founders committee (to be established by way of a shareholders’ resolution) of the existing company that wishes to convert to a public joint stock company must draft a letter to SCA requesting a listing window reservation and confirming eligibility.</li>\r\n 	<li dir=\"LTR\">Afterwards, the founders committee applies to SCA for a public joint stock conversion accompanied by its shareholders’ resolution approving such conversion.</li>\r\n 	<li dir=\"LTR\">Simultaneously, the said company appoints, approves and forms the said founders committee.</li>\r\n 	<li dir=\"LTR\">Subsequently, the founders committee files with SCA the first draft of the local prospectus as well as the shareholders’ resolution of the existing company approving the conversion, a final draft of the IPO MoA and AoA, a business plan review, and a final real estate valuation report.</li>\r\n 	<li dir=\"LTR\">SCA will examine the conversion application and filed documents and produce a decision on the request within a period of ten (10) working days.</li>\r\n 	<li dir=\"LTR\">In case of approval of the conversion by SCA, the founders committee must announce the conversion and notify its shareholders and creditors (if any) of such conversion via written notice within a period of five (5) working days from the date of SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Shareholders and/or creditors of the company are given a period of fifteen (15) working days to object to the conversion.</li>\r\n 	<li dir=\"LTR\">Afterwards, the company files with SCA a copy of the resolution and confirmation that the opposition period has expired. SCA forms a committee to evaluate the company assets. The process of this evaluation process is thirty (30) working days.</li>\r\n 	<li dir=\"LTR\">A meeting between SCA and the DED is then held to examine the conversion application and its documents. The time for such procedure is five (5) working days.</li>\r\n 	<li dir=\"LTR\">In case of final approval of the conversion application, SCA issues a licence to the company and such licensing decision is then published in the official gazette at the expense of the company founders.</li>\r\n 	<li dir=\"LTR\">The company then proceeds with the IPO and listing in the same manner as a newly established public joint stock company.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Regulatory architecture: overview of the regulators and key regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The key regulators in the UAE in respect of the IPO process are the Securities and Commodities Authority (SCA) and the Department of Economic Development (DED). Additionally, and depending on the nature of the company’s business, the company may be required to obtain the approval of other relevant governmental authorities or regulators such as the Central Bank or the Insurance Authority in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Other than the key regulators mentioned above and as part of the IPO process, the company is required to liaise with ADX or DFM for the listing of its shares and their offering to the public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the Companies Law, one of the important regulations in respect of an IPO are the Companies Law, and the Chairman of SCA’s Resolution No. (11/R.M.) of 2016 governing public offering and issuance of shares of public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Public company responsibilities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are subject to a more refined governing structure in comparison to other legal forms of companies. The main differences manifest in the ‘corporate governance’ and the ‘disclosure and transparency’ regulations applicable to public joint stock companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Disclosure and transparency regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Post the IPO, the company and its shareholders have additional disclosure and transparency obligations, which include restrictions on dealing with the securities of the company, notification obligations in relation to material developments affecting the company, restrictions on publishing certain data relating to the company and to provide SCA with copies of certain documents including financial reports, and details of general assemblies and resolutions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Corporate governance regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are obliged to follow separate regulations for corporate governance in addition to those specified in the Companies Law. Such set of corporate governance regulations can be found in SCA’s Resolution No. (7/R.M.) of 2016 concerning the standards of institutional discipline and governance of public joint stock companies (\"CGR\"). These include, amongst other obligations (i) that the company is obliged to obtain approval from its shareholders and maintain records of transactions that take place with related parties, (ii) all shares issued in the company must be in the same class with equal rights attached to them, (iii) the AoA and internal by-laws of the company should include controls to protect shareholders’ rights, and (iv) the company must have internal control systems to ensure compliance with corporate governance rules.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company is also obliged to issue a ‘Corporate Governance Report’, which has to provide details of all remuneration and compensation paid to the board; such report must be available to the shareholders prior to the annual general meeting.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Potential risks, liabilities and pitfalls</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given that the IPO is a simple and straightforward process, there should be no potential legal risks, liabilities or pitfalls with regards to undertaking the IPO process should the above-mentioned procedures be thoroughly followed and all governmental approvals obtained. This is notwithstanding any risks, liabilities and pitfalls related to the business of the company itself or any market risks occurring during the IPO process. However, any negligence on the part of the company or its advisors may expose the company and its founders to risk. The IPO is a lengthy and detailed process that needs to be dealt with by advisors who are experienced in the field of IPOs, in order for them to handle the requirements and ensure compliance with all regulations in an efficient manner and minimise any risk to the company and its founders.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-7998\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/shutterstock_589011317.jpg\" alt=\"\" width=\"5472\" height=\"2384\" />Acknowledgment</em></p>\r\n<em>The authors would like to thank Sarah Tomy and Anna Robinson for their invaluable assistance in the preparation of this chapter.</em>'),
	(247598,24177,'MetaValueOld','The Federal Tax Authority (“<strong>FTA</strong>”) has recently issued a new public clarification to explain the recoverability of input VAT on entertainment expenses. They have also published a guide to provide guidance to businesses operating in designated zones (“<strong>DZs</strong>”) on the VAT treatment of their activities within and outside the DZs.\r\n\r\n<strong>1.     The Clarification\r\n\r\n</strong>In the Public Clarification VAT P005 (“<strong>Clarification</strong>”), the FTA confirms that where the costs are incurred for a genuine business purpose or are incidental to such a purpose, VAT will be recoverable. However, where the hospitality becomes an end in itself and becomes the main purpose for attending an event, this would be regarded as entertainment and consequently any VAT incurred on such costs would not be recoverable.\r\n\r\nThe Clarification also provides detailed criteria to enable businesses to ascertain the circumstances in which costs would be incurred for a genuine business purpose or incidental to such a purpose, or considered to be an end in themselves.\r\n\r\nExamples of costs which are considered to be incurred for a genuine business purpose or are incidental to such a purpose include:\r\n<ul>\r\n 	<li>catering services for conferences where a fee is charged;</li>\r\n 	<li>food and drinks purchased by an employee for own consumption during a business trip; and</li>\r\n 	<li>sundry office expenses such as tea and coffee supplies or flowers for display in offices.</li>\r\n</ul>\r\nExamples of costs incurred for entertainment services which constitute an end in itself include:\r\n<ul>\r\n 	<li>gala dinners for no charge;</li>\r\n 	<li>Ramadan Iftars; and</li>\r\n 	<li>staff parties.</li>\r\n</ul>\r\n<strong>2.     VAT Guide on DZs\r\n\r\n</strong>Under the VAT Guide on DZs, the FTA confirmed the VAT treatment applicable to businesses operating in DZs as provided for in the VAT law and related executive regulations and clarified the VAT treatment of supplies in specific cases where there was previously some uncertainty. The key takeaways are as follows:\r\n<ul>\r\n 	<li>the FTA have clarified that the movement of goods from a designated zone into the UAE mainland will be treated as an import of goods into the UAE and the importer would be required to account for VAT on the import of the goods;</li>\r\n 	<li>the FTA have indicated that supply of goods from a business established in a designated zone to outside the UAE will be outside the scope of VAT rather than zero rated for VAT purposes as had been assumed by some businesses;</li>\r\n 	<li>the place of supply of water and energy for the purpose of consumption is treated as being within the UAE even if it is used in the process of production of other goods in the designated zone; and</li>\r\n 	<li>the FTA have reiterated that, for the purpose of the designated zones rules, real estate is not treated as consumed when sold or leased within a designated zone and accordingly such supplies of real estate are outside the scope of VAT. However, the supply of real estate other than by way of sale or lease (e.g. the right to use hotel accommodation) will be treated as a supply of services related to real estate and subject to VAT in the normal way.</li>\r\n</ul>\r\n<strong>What should you do next?</strong>\r\n<strong>\r\n</strong>Businesses should consider the implications of this Clarification on their transactions to ensure that the correct amount of input VAT is being recovered. Further, businesses should understand the impact of the VAT Guide on DZs on their business operations within and outside DZs and continuously ensure that the correct VAT treatment is being applied to its transactions.\r\n\r\n<strong>How can we help?</strong><strong>\r\n\r\n</strong>Al Tamimi can assist you to assess the impact of this Clarification and the VAT Guide on DZs, and advise you on the recoverability of input VAT and VAT treatment of transactions involving entities operating in DZs.\r\n\r\nPlease do not hesitate to contact <strong><a href=\"http://localhost:8888/tamimi/our-firm/find-a-lawyer/?searchPractice=651\">Al Tamimi’s Tax Team</a></strong> if you require any assistance.');

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	(249001,24298,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7997 aligncenter\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"694\" height=\"642\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
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	(247601,24177,'ReportText','The Federal Tax Authority (“<strong>FTA</strong>”) has recently issued a new public clarification to explain the recoverability of input VAT on entertainment expenses. They have also published a guide to provide guidance to businesses operating in designated zones (“<strong>DZs</strong>”) on the VAT treatment of their activities within and outside the DZs.\r\n\r\n<strong>1.     The Clarification\r\n\r\n</strong>In the Public Clarification VAT P005 (“<strong>Clarification</strong>”), the FTA confirms that where the costs are incurred for a genuine business purpose or are incidental to such a purpose, VAT will be recoverable. However, where the hospitality becomes an end in itself and becomes the main purpose for attending an event, this would be regarded as entertainment and consequently any VAT incurred on such costs would not be recoverable.\r\n\r\nThe Clarification also provides detailed criteria to enable businesses to ascertain the circumstances in which costs would be incurred for a genuine business purpose or incidental to such a purpose, or considered to be an end in themselves.\r\n\r\nExamples of costs which are considered to be incurred for a genuine business purpose or are incidental to such a purpose include:\r\n<ul>\r\n 	<li>catering services for conferences where a fee is charged;</li>\r\n 	<li>food and drinks purchased by an employee for own consumption during a business trip; and</li>\r\n 	<li>sundry office expenses such as tea and coffee supplies or flowers for display in offices.</li>\r\n</ul>\r\nExamples of costs incurred for entertainment services which constitute an end in itself include:\r\n<ul>\r\n 	<li>gala dinners for no charge;</li>\r\n 	<li>Ramadan Iftars; and</li>\r\n 	<li>staff parties.</li>\r\n</ul>\r\n<strong>2.     VAT Guide on DZs\r\n\r\n</strong>Under the VAT Guide on DZs, the FTA confirmed the VAT treatment applicable to businesses operating in DZs as provided for in the VAT law and related executive regulations and clarified the VAT treatment of supplies in specific cases where there was previously some uncertainty. The key takeaways are as follows:\r\n<ul>\r\n 	<li>the FTA have clarified that the movement of goods from a designated zone into the UAE mainland will be treated as an import of goods into the UAE and the importer would be required to account for VAT on the import of the goods;</li>\r\n 	<li>the FTA have indicated that supply of goods from a business established in a designated zone to outside the UAE will be outside the scope of VAT rather than zero rated for VAT purposes as had been assumed by some businesses;</li>\r\n 	<li>the place of supply of water and energy for the purpose of consumption is treated as being within the UAE even if it is used in the process of production of other goods in the designated zone; and</li>\r\n 	<li>the FTA have reiterated that, for the purpose of the designated zones rules, real estate is not treated as consumed when sold or leased within a designated zone and accordingly such supplies of real estate are outside the scope of VAT. However, the supply of real estate other than by way of sale or lease (e.g. the right to use hotel accommodation) will be treated as a supply of services related to real estate and subject to VAT in the normal way.</li>\r\n</ul>\r\n<strong>What should you do next?</strong>\r\n<strong>\r\n</strong>Businesses should consider the implications of this Clarification on their transactions to ensure that the correct amount of input VAT is being recovered. Further, businesses should understand the impact of the VAT Guide on DZs on their business operations within and outside DZs and continuously ensure that the correct VAT treatment is being applied to its transactions.\r\n\r\n<strong>How can we help?</strong><strong>\r\n\r\n</strong>Al Tamimi can assist you to assess the impact of this Clarification and the VAT Guide on DZs, and advise you on the recoverability of input VAT and VAT treatment of transactions involving entities operating in DZs.\r\n\r\nPlease do not hesitate to contact <strong><a href=\"http://localhost:8888/tamimi/our-firm/find-a-lawyer/?searchPractice=651\">Al Tamimi’s Tax Team</a></strong> if you require any assistance.|The Federal Tax Authority (“<strong>FTA</strong>”) has recently issued a new public clarification to explain the recoverability of input VAT on entertainment expenses. They have also published a guide to provide guidance to businesses operating in designated zones (“<strong>DZs</strong>”) on the VAT treatment of their activities within and outside the DZs.\r\n\r\n<strong>1.     The Clarification</strong>\r\n\r\nIn the Public Clarification VAT P005 (“<strong>Clarification</strong>”), the FTA confirms that where the costs are incurred for a genuine business purpose or are incidental to such a purpose, VAT will be recoverable. However, where the hospitality becomes an end in itself and becomes the main purpose for attending an event, this would be regarded as entertainment and consequently any VAT incurred on such costs would not be recoverable.\r\n\r\nThe Clarification also provides detailed criteria to enable businesses to ascertain the circumstances in which costs would be incurred for a genuine business purpose or incidental to such a purpose, or considered to be an end in themselves.\r\n\r\nExamples of costs which are considered to be incurred for a genuine business purpose or are incidental to such a purpose include:\r\n<ul>\r\n 	<li>catering services for conferences where a fee is charged;</li>\r\n 	<li>food and drinks purchased by an employee for own consumption during a business trip; and</li>\r\n 	<li>sundry office expenses such as tea and coffee supplies or flowers for display in offices.</li>\r\n</ul>\r\nExamples of costs incurred for entertainment services which constitute an end in itself include:\r\n<ul>\r\n 	<li>gala dinners for no charge;</li>\r\n 	<li>Ramadan Iftars; and</li>\r\n 	<li>staff parties.</li>\r\n</ul>\r\n<strong>2.     VAT Guide on DZs</strong>\r\n\r\nUnder the VAT Guide on DZs, the FTA confirmed the VAT treatment applicable to businesses operating in DZs as provided for in the VAT law and related executive regulations and clarified the VAT treatment of supplies in specific cases where there was previously some uncertainty. The key takeaways are as follows:\r\n<ul>\r\n 	<li>the FTA have clarified that the movement of goods from a designated zone into the UAE mainland will be treated as an import of goods into the UAE and the importer would be required to account for VAT on the import of the goods;</li>\r\n 	<li>the FTA have indicated that supply of goods from a business established in a designated zone to outside the UAE will be outside the scope of VAT rather than zero rated for VAT purposes as had been assumed by some businesses;</li>\r\n 	<li>the place of supply of water and energy for the purpose of consumption is treated as being within the UAE even if it is used in the process of production of other goods in the designated zone; and</li>\r\n 	<li>the FTA have reiterated that, for the purpose of the designated zones rules, real estate is not treated as consumed when sold or leased within a designated zone and accordingly such supplies of real estate are outside the scope of VAT. However, the supply of real estate other than by way of sale or lease (e.g. the right to use hotel accommodation) will be treated as a supply of services related to real estate and subject to VAT in the normal way.</li>\r\n</ul>\r\n<strong>What should you do next?</strong>\r\n<strong>\r\n</strong>Businesses should consider the implications of this Clarification on their transactions to ensure that the correct amount of input VAT is being recovered. Further, businesses should understand the impact of the VAT Guide on DZs on their business operations within and outside DZs and continuously ensure that the correct VAT treatment is being applied to its transactions.\r\n\r\n<strong>How can we help?</strong>\r\n\r\nAl Tamimi can assist you to assess the impact of this Clarification and the VAT Guide on DZs, and advise you on the recoverability of input VAT and VAT treatment of transactions involving entities operating in DZs.\r\n\r\nPlease do not hesitate to contact <strong><a href=\"http://localhost:8888/tamimi/our-firm/find-a-lawyer/?searchPractice=651\">Al Tamimi’s Tax Team</a></strong> if you require any assistance.'),
	(249002,24298,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7997 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"600\" height=\"589\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
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	(247608,24178,'PostTitle','FTA issues clarification on the recoverability of input VAT for &#039;entertainment services&#039; and guide on designated zones'),
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	(247610,24178,'PostDate','2018-07-31 16:57:00'),
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	(247619,24179,'PostTitle','FTA issues clarification on the recoverability of input VAT for \'entertainment services\' and guide on designated zones'),
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	(247621,24179,'PostDate','2018-07-31 16:57:00'),
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	(247630,24180,'PostTitle','Enforcement and Challenges to Arbitral Awards under the New Arbitration Law in the UAE'),
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	(247632,24180,'PostDate','2018-07-31 10:04:57'),
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	(247639,24181,'PostID','7930'),
	(247640,24181,'PostTitle','Enforcement and Challenges to Arbitral Awards under the New Arbitration Law in the UAE'),
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	(247642,24181,'PostType','law_update_articles'),
	(247643,24181,'PostDate','2018-07-31 10:04:57'),
	(247644,24181,'PostUrl','http://localhost:8888/tamimi/?post_type=law_update_articles&p=7930'),
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	(247647,24181,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignnone size-full wp-image-7963\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/1.jpg\" alt=\"\" width=\"5000\" height=\"1427\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;'),
	(247648,24181,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;'),
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	(249023,24300,'PostTitle','Now Coming to the DIFC: The Infinitely Flexible and Versatile Corporate Scheme of Arrangement'),
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	(249025,24300,'PostDate','2018-07-31 17:30:12'),
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	(249034,24301,'PromoMessage','Upgrade to premium and extend the plugin’s features with email alerts, reports tool, free-text based search, user logins and sessions management and more! <strong><a href=\"http://localhost:8888/tamimi/wp-admin/admin.php?page=wsal-auditlog-pricing\">Upgrade to Premium</a></strong> | <strong><a href=\"https://www.wpsecurityauditlog.com/premium-features/?utm_source=alert&utm_medium=page&utm_content=alert+more+info&utm_campaign=upgrade+premium\" target=\"_blank\">More Information</a></strong>'),
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	(249036,24302,'PostID','7937'),
	(249037,24302,'PostTitle','Now Coming to the DIFC: The Infinitely Flexible and Versatile Corporate Scheme of Arrangement'),
	(249038,24302,'PostStatus','draft'),
	(249039,24302,'PostType','law_update_articles'),
	(249040,24302,'PostDate','2018-07-31 17:33:04'),
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	(249044,24302,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968  alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(249010,24299,'PostID','7935'),
	(249011,24299,'PostType','law_update_articles'),
	(249012,24299,'PostTitle','Overhaul of the UAE Finance Companies Regulations'),
	(249013,24299,'PostStatus','draft'),
	(249014,24299,'PostDate','2018-07-31 17:32:40'),
	(249015,24299,'PostUrl','http://localhost:8888/tamimi/?post_type=law_update_articles&p=7935'),
	(249003,24298,'MetaLink','content'),
	(249004,24298,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7935&amp;action=edit'),
	(249005,24298,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7997 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"600\" height=\"589\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-7994 size-full\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/11.jpg\" alt=\"\" width=\"5472\" height=\"845\" />Amongst the several new laws and regulations being introduced in the UAE, the UAE Central Bank (\"Central Bank\") has on10 May 2018 issued new Finance Company Regulations (\"Regulations\" or \"2018 Regulations\") which are to come into effect one month after its publication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations replace the previous finance company regulations issued in 1996 and finance companies regulations for companies conducting business as per Islamic sharia’a principles issued in 2004 (\"Previous Regulations\") and aim at providing a detailed regulatory framework for Finance Companies to operate and develop within the UAE and also covers in its ambit the framework for protecting the customers of such Finance Companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations consolidate the regulations for both Islamic finance and conventional finance companies (\"Finance Company/ies\") and incorporate certain significant changes including changes to capital requirements and corporate governance, to also be followed by existing Finance Companies. We have set out below certain noteworthy features of these Regulations and a comparative table on the key changes from the Previous Regulations on subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>License Application</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Pursuant to these Regulations, conducting financing activities in the UAE without a central bank license is prohibited. An application for such license must include the proposed scope of activities, a feasibility study illustrating the financial activities and products to be launched, estimated financial projections, risk factors, corporate structure, start-up costs, branches and a recruitment plan.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Another important requisite is for the applicant to provide an unconditional guarantee from a UAE Bank, in favour of the Central Bank for an amount equivalent to the minimum required paid-up capital. The License will be granted for a period of three years and may be renewable for the same period unless otherwise required by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Any changes to the ownership of the Finance Company of 5% or more will require prior approval from the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Cancelling or Revoking a License</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank has the discretion to approve or refuse the License application, but must notify applicants in writing with reasons in case there is a refusal. Licenses can also be amended, revoked or cancelled at the discretion of the Board. The Regulations set out instances when the license can be cancelled which include providing false/misleading information, risking interests of the potential customers, or if there is a bankruptcy order filed against the Finance Company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a Finance Company wishes to cease operations it must apply to the Central Bank at least six months in advance providing the reasons for such a cessation or suspension.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Regulations also provide for penalties that will be imposed if such company does not follow the provisions of the Regulations including adhering to the anti-money laundering policies laid down by the Central Bank.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Permitted Activities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10.1 of the Regulation details out the types of activities that are permitted, which are:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Retail finance,</li>\r\n 	<li dir=\"LTR\">mortgage finance,</li>\r\n 	<li dir=\"LTR\">wholesale finance,</li>\r\n 	<li dir=\"LTR\">pre-paid cards, and</li>\r\n 	<li dir=\"LTR\">distribution of third party products.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">The Central Bank can review and amend this list from time to time.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 10 further sets out the do’s and dont’s in relation to the business of the Finance Company, certain key features are:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">it can extend loans only to ‘Juridicial Persons’ (defined under Article 93 of the UAE Civil Transactions Law) and individuals in the UAE. However, it is prohibited from accepting deposits or loans from individuals.</li>\r\n 	<li dir=\"LTR\">it may accept deposits only from Juridicial Persons, subject to certain conditions laid out under Article 10.4 and also borrow from UAE banks, and may even receive foreign funding provided that its risk has been adequately hedged. In doing so it must not exceed 25% of the sum of total amount of its debt capital.</li>\r\n 	<li dir=\"LTR\">it must obtain a no objection letter from the Central Bank in order to provide any new product line from within activities specified in its license.</li>\r\n 	<li dir=\"LTR\">it may only participate in the share capital of brokerage companies, money exchanges, UAE banks and other Finance Companies. Any such single participation cannot exceed 10% of its debt capital and the aggregate participation must not exceed 25% of the debt capital.</li>\r\n 	<li dir=\"LTR\">It must obtain approval from the Central Bank in order to issue bonds or sukuks. Such bonds and sukuks shall only be denominated in UAE dirhams or US Dollars.</li>\r\n 	<li dir=\"LTR\">it is prohibited from financing a borrower which is not an entity incorporated in the UAE or its free zones, or a UAE resident, or where the mortgaged assets are not in the UAE.</li>\r\n 	<li dir=\"LTR\">it is prohibited from entering into the business of money exchange.</li>\r\n 	<li dir=\"LTR\">it must not purchase immovable properties unless for its own use or specific approval for the same has been obtained from the Central Bank. This rule does not apply to Islamic Finance Companies (IFC). IFCs may own property including immovable property and goods as part of an underlying financing contract with a borrower.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Minimum Capital, Liquidity Requirements and Credit Exposure Restrictions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The minimum paid-up capital for a Finance Company is 150 million UAE Dirhams. UAE national ownership of the Finance Company must comprise at least 60% of total paid-up capital. Finance Companies must also allocate at least 10% of annual net profits to establishing a statutory reserve until the reserve equals 50% of its paid-up capital.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To withstand short-term liquidity stress, Finance Companies are required to hold an amount equivalent to 10% of their aggregate liabilities in liquid assets i.e. cash held in UAE bank, Certificates of deposit issued by the Central Bank held via a UAE bank, short term deposits with a UAE bank with maturity upto 30 days and UAE federal and local government bonds, which must not exceed 30% of the total liquid assets. For the purpose of calculating the 10% amount, a Finance Company may deduct from its aggregate liabilities, cash collateral, bank guarantees from UAE banks and sovereign guarantees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The credit exposure is considered ‘large’ if the value of such exposure to one borrower or group of related entities is 7% or more. The Regulations set out maximum exposure limits for different borrower types.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Organisational Structure, Composition and Policies of the Finance Company</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Founding shareholders - Founding shareholders must satisfy \"Fit and Proper\" criteria as defined by the Central Bank and their appointment must be in line with the Commercial Companies Law<strong>.</strong></li>\r\n 	<li dir=\"LTR\">Board of Directors - The board of directors of a Finance Company must have no fewer than five members. Atleast 60% of the board members of an IFC must have knowledge of the banking business or Islamic finance and banking business as the case may be. The Regulations provide for detailed selection processes and guidances in relation to the board of directors</li>\r\n 	<li dir=\"LTR\">Sharia’a Supervision Committee and other committees - An IFC must have a Sharia’a Supervision Committee, and its role must be laid out in the policies of the IFC. Finance Companies must also have a board committee and credit committee.</li>\r\n 	<li dir=\"LTR\">Senior Management – Finance Companies must comply with the ‘fit and proper‘ test set out by the Central Bank and must be professional who understands the business of finance and was experience of not less than 10 years in the field of finance. Person within the senior management cannot be a part of the board.</li>\r\n 	<li dir=\"LTR\">Corporate Governance - While the Regulations set out certain minimum requirements for corporate governance, Finance Companies are permitted to set out their own policies and framework for corporate governance (complying with the Regulations), however these must be approved by its board of directors and a copy of such policies must be provided to the Central Bank.</li>\r\n 	<li dir=\"LTR\">Internal Policies – the Regulations set out the requirements that need to be adhered to by Finance Companies and IFC with respect to its internal polices in relation to management, risk management, extension of credit, compliance, information technology, security, audit, remuneration, outsourcing, etc.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Other provisions</strong></p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">Consumer Protection: the Name of the finance company must not include the words \"bank\", \"investment company\" or and other term which may mislead its customer. It must provide its customers with sufficient information regarding its products, etc. in order for them to be able to make an informed decision. The Finance Company must follow the Central Bank guidelines in relation to ‘Consumer Protection’.</li>\r\n 	<li dir=\"LTR\">Credit Reports - Every Finance Company must adhere to the credit reporting requirements of the Al Etihad Credit Bureau and other credit agencies to provide to and obtain information of the Borrower.</li>\r\n 	<li dir=\"LTR\">Accounting Standards - A Finance Company must implement all applicable International Accounting Standards/International Financial Reporting Standards and provide the Central Bank with two copies of signed audited financial statements, including external auditor reports, before 31st March every year. The Central Bank may require the Finance Company to appoint another auditor if the size and nature of the business of the Finance Company so requires.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Differences in the new Regulations from the Previous Regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The 2018 Regulations are far more detailed in the nature of investments permitted, liquidity requirements, organisational structure to be followed, investor guidance; we have set out below certain differences in the provisions between the Previous Regulations and 2018 Regulations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7997 aligncenter\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/Screen-Shot-2018-07-31-at-5.23.26-PM.png\" alt=\"\" width=\"694\" height=\"642\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These Regulations apply to all Finance Companies. Accordingly companies licensed prior to the date of the issuance of these Regulations need to comply with the 2018 Regulations and are given a period not exceeding 3 years from the publication to conform. However, the Central Bank may amend the requirement of compliance within 3 years if it deems the finance company to be substantially in compliance with these Regulations. All existing Finance Companies will require to provide the Central Bank with a detailed adjustment plan to comply with the articles of these Regulations.</p>\r\nAl Tamimi &amp; Company’s Banking and Finance team regularly advises on the Finance Company Regulations. For further information please contact Mark Brown (m.brown@tamimi.com) or Maymoona Talib (m.talib@tamimi.com).'),
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	(247650,24181,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7930&amp;action=edit'),
	(247651,24181,'ReportText','<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignnone size-full wp-image-7963\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/1.jpg\" alt=\"\" width=\"5000\" height=\"1427\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;'),
	(249045,24302,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 size-large alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(247658,24182,'PostTitle','Enforcement and Challenges to Arbitral Awards under the New Arbitration Law in the UAE'),
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	(247660,24182,'PostDate','2018-07-31 10:04:57'),
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	(247669,24183,'PostTitle','Enforcement and Challenges to Arbitral Awards under the New Arbitration Law in the UAE'),
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	(247671,24183,'PostDate','2018-07-31 16:58:58'),
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	(247679,24184,'PostType','law_update_articles'),
	(247680,24184,'PostTitle','Enforcement and Challenges to Arbitral Awards under the New Arbitration Law in the UAE'),
	(247681,24184,'PostStatus','draft'),
	(247682,24184,'PostDate','2018-07-31 10:04:57'),
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	(247689,24185,'PostID','7930'),
	(247690,24185,'PostTitle','Enforcement and Challenges to Arbitral Awards under the New Arbitration Law in the UAE'),
	(247691,24185,'PostStatus','draft'),
	(247692,24185,'PostType','law_update_articles'),
	(247693,24185,'PostDate','2018-07-31 10:04:57'),
	(247694,24185,'PostUrl','http://localhost:8888/tamimi/?post_type=law_update_articles&p=7930'),
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	(247697,24185,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\"><img class=\"size-full wp-image-7963 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/1.jpg\" alt=\"\" width=\"5000\" height=\"1427\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;'),
	(247698,24185,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignnone size-full wp-image-7963\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/1.jpg\" alt=\"\" width=\"5000\" height=\"1427\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;'),
	(247699,24185,'MetaLink','content'),
	(247700,24185,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7930&amp;action=edit'),
	(247701,24185,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignnone size-full wp-image-7963\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/1.jpg\" alt=\"\" width=\"5000\" height=\"1427\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;|<p dir=\"LTR\" align=\"LEFT\"><img class=\"size-full wp-image-7963 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/1.jpg\" alt=\"\" width=\"5000\" height=\"1427\" /></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 03 May 2018 the UAE enacted Federal Law No. 6 of 2018 (\"the New Law\"), as published in the Official Gazette No 630 of 15 May 2018. The New Law replaced certain arbitration provisions found in the UAE Civil Procedures Law No. 11 of 1992, particularly Articles 203-218 (\"the former arbitration provisions\"). The New Law took effect after a month its publication, accordingly applying from mid-June 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The enactment of the New Law confirms the UAE’s commitment to bring its arbitration law in line with internationally accepted best practice. In this article we consider key provisions of the New Law, with particular focus on the enforcement of arbitration awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Key Aspects of the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 2 outlines the scope of application of the New Law. It states that it applies to (i) any arbitration conducted in the UAE, unless the parties agree to another law governing the arbitration proceedings; (ii) any international arbitrations conducted outside the UAE, where the parties agree to apply the New Law to govern such proceedings; and (iii) to any arbitration arising from a dispute in respect of a legal relationship governed by UAE law, save where excepted by special provision.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>A significant feature of the New Law is Article 3, which defines ‘international arbitration’. An arbitration is international if ‘the parties have, at the time of conclusion of the arbitration agreement, their places of business in different States’.</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Moreover, an arbitration is deemed to be international, if the place of arbitration, or the place of performance of the contractual obligations, or the subject matter of the dispute is connected with more than one country, or if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. This new feature did not exist in the former arbitration provisions and which were limited to domestic and foreign arbitrations only. They did not consider any aspects of international arbitration, even in cases where the domestic arbitration contained elements of international arbitration. The New Law does not, however, confer any additional advantages for international arbitration in terms of the enforcement of an award, as the procedure to ratify an international award is similar to that of domestic awards. The New Law does, however, provide the parties with freedom to choose the New Law to govern the arbitration proceedings, even if the arbitration proceedings are conducted outside the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Chapter II Article 4 of the New Law deals with the parties’ capacity to enter into an arbitration agreement. Similarly, Articles 5 to 8 of the New Law cover the form, autonomy and subject matter of arbitration agreements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, the New Law defines arbitration institutions and confers wide powers on these institutions if the parties to the arbitration agree to apply arbitration institutional rules. The New Law accordingly covers all types of arbitrations, regardless of it being ad-hoc, institutional or arbitration conducted through the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 11 provides mechanisms where the parties fail to agree on the appointment of an arbitrator/tribunal. Under the former arbitration provisions (Article 204), in such circumstances, parties were required to file a Court application for direction - which was effectively similar to initiating full litigation proceedings. The New Law allows the parties simply to apply to the relevant authority, which is either the body authorized to administer the arbitration, or the Court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the former arbitration provisions the grounds for challenging an arbitrator were similar to the grounds for the recusal or impleading of judges. The New Law, under Articles 14 and 15, changes this - providing specific grounds and procedures for challenging an arbitrator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law recognizes key principles and practices of international commercial arbitration including the principles of severability, Article 6(1), and competence-competence - Article 19(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 21 deals with the jurisdiction of the tribunal to issue interim or conservatory measures concerning arbitration proceedings, at the request of a party or on its own motion.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In contrast to the former arbitration provisions, Article 28 differentiates the ‘place of arbitration’ i.e. the seat of arbitration with which an award is legally connected, and the ‘venue of arbitration’ - where the arbitration sessions or hearings are conducted. Moreover, Article 41(6) provides that an award shall be considered as issued at the place of arbitration, as determined under Article 28, even if the tribunal signed an award outside the place of arbitration. The tribunal may conduct arbitration hearings and deliberations through modern means of communication (according to Article 28(2)(b)). Likewise, Article 35 provides an arbitral tribunal with the discretion to hear any witnesses, including expert witnesses, through modern means of communication.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Enforcement of Awards under the New Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 52 provides that an award issued under the New Law shall have res judicata status and be enforceable as a court judgment. The same article also states that an award must be ratified prior to its enforcement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Unlike the former arbitration provisions, Article 55(1) states that a party seeking to enforce an award must submit an application to the Chief Justice of the relevant Court, together with supporting documents. The term ‘Court’ is defined as the Federal Court of Appeal or local Courts of Appeal in the UAE. Under Article 55(1), the Chief Justice of the Court (or any judges empowered by the Chief Justice) should issue an order confirming ratification and enforcement of the award within sixty days from the date of the submission of the application, unless any of the grounds for setting aside of the award exists under Article 53(1).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Challenging the Decision against Enforcement of Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under Article 57, a party may challenge a decision of the Court on the ratification of the award, by filing a grievance before the Court within thirty days. Article 57 reads as follows:</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>\"A grievance may be filed against the Court’s decision to grant or deny enforcement of an arbitral award before the competent Court of Appeal within thirty days from the date following notification\".</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Article 57 does not confirm whether a decision of the ‘competent Court of Appeal’ is to be considered as final or if an aggrieved party could pursue an appeal before the Cassation Court. Considering the New Law does not provide for an appeal of the decision of the ‘competent Court of Appeal’ on the grievance presented under Article 57, it is our respectful view that the decision of the ‘competent Court of Appeal’ is likely to be deemed as final. Otherwise, this could lead to lengthy procedures and result in delays of enforcement of awards, which is against the core of objectives of the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Action to set aside Arbitration Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Article 53 entitles a party to challenge the enforcement of an award by submitting an application before the Court under one or more grounds contained in Articles 53(1)(a) - (h). Further, Article 53(2) states that the Court shall set aside an award if the subject matter of the dispute is not capable of settlement, or if the award is in conflict with public order.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">An action to set aside an arbitration award must be submitted by a party within thirty days from the date of notification of such award, otherwise the action will be time barred under Article 54(2).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Besides the option of filling an action to set aside an award under Article 53(1), a party seeking to challenge an award may also submit objections to ratifying the award before the Court during the process of ratification in accordance with Article 57. Accordingly, there are three options for a party to challenge the ratification and enforcement of an award:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">file a case seeking to set aside an award under Article 53(1) before the Court of Appeal and this decision is subject to appeal before the Court of Cassation under Article 54(1);</li>\r\n 	<li dir=\"LTR\">present a defence to the Court objecting to the ratification and enforcement of the award during the process of ratification initiated by the award creditor under Article 55(1); or</li>\r\n 	<li dir=\"LTR\">submit a grievance against the Court’s decision to grant or deny enforcement under Article 57.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Mechanism to Recognise and Enforce Foreign Awards</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The New Law does not expressly provide for the procedures applicable to the recognition and enforcement of foreign awards in the UAE. This begs the question - what procedures are applicable to the recognition of foreign arbitral awards in the UAE? Should a party seeking recognition apply to the Court of First Instance (the position prior to the enactment of the New Law) or should the parties follow the new procedures for ratifying awards as laid down under the New Law?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering that Article 3 of the New York Convention requires Contracting States not to impose substantially more onerous conditions on the recognition and enforcement of foreign awards than are imposed on the enforcement of domestic awards, it is our view that the provisions of the New Law will apply for the recognition and enforcement of foreign awards. Further, the UAE is committed to fulfilling its obligations under applicable international conventions and treaties. It is accordingly inferred that a party seeking recognition of a foreign award should be required to submit an application to the Chief Justice of the Court in accordance with Article 55(1), together with the documents detailed in Article 4 of the New York Convention.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Since the UAE is a signatory to the New York Convention, UAE Courts should take into consideration Article 5, which provides the grounds for refusing recognition of foreign awards, rather than the grounds contained in Article 53(1), as the provisions of the Convention, we suggest, supersede the New Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A party seeking to challenge the recognition and enforcement of a foreign award could submit their defence, objecting to enforcement of the foreign award, to the Court during the ratification process initiated by the award creditor under Article 55(1). However, the option for filling an action to set aside an award under Article 53(1) will not be available for foreign awards, as the UAE Courts do not have jurisdiction, in our view, to set aside foreign awards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\nThe New Law is undoubtedly a great milestone in the progression of international commercial arbitration in the UAE. It has taken into account the particular features and requirements of international commercial arbitration in the UAE. Thus, the New Law should contribute to making the UAE an arbitration hub in the region. However, certain elements of its enforcement provisions may still require clarity.\r\n\r\n&nbsp;'),
	(249046,24302,'MetaLink','content'),
	(249047,24302,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7937&amp;action=edit'),
	(249048,24302,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 size-large alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968  alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
