The UAE’s Cabinet has approved amendments to the country’s 1981 Commercial Agencies Law (Federal Law No. 18/1981). The amendments are aimed at supporting commercial agencies, encouraging investment and balancing the interests of agents and clients. They will apply to UAE nationals, foreign principals, those in the business sector and public shareholding companies. It will also provide the Emirati family-owned SMEs with the least risk when they default.
The DIFC has enacted amendments to the 2019 Employment Law (DIFC Law No. 2/2019) and introduced new Employment Regulations which introduce a new end of service savings plan. The amendments to the Labour Law introduce the new Qualifying Scheme workplace savings scheme in the Centre and replace the current end-of-service gratuity payment regime which has been in place since the Centre’s founding in 2004. They come into force on 1 February 2020 and employers will have to make mandatory monthly contributions to a professionally managed and regulated savings plan after that.
The new Regulations set out the requirements for Qualifying Schemes. Employers have until 31 March 2020 to enrol into a Qualifying Scheme. These include the DIFC Employee Workplace Savings Plan. Alternatively, employers may seek a Certificate of Compliance from the DIFC Authority for an alternative Qualifying Scheme under the Regulations.
There will also be a new oversight body which will have the right to appoint and remove the scheme operator, review its governance and fees and charges imposed on the scheme. In addition, Qualifying Schemes must require employer and employee representation and independent oversight with the aim of ensuring the proper protection of the employee’s interests.
Employees will also be allowed to make voluntary workplace savings contributions into a Qualifying Scheme on top of the mandatory monthly contributions to be made by employers under the Employment Law and ensure any accrued end-of-service benefits under the current regime remain in place, also providing employers with the option to pay these accrued benefits into a Qualifying Scheme. In addition, there are exemptions for certain types of employees, like those on secondment in the Centre, short-term workers, equity partners and employees working for Government departments and bodies which have a presence in the Centre. The mandatory contributions to be made by employers are set at 5.83% of monthly basic wage, for employees who have less than five years’ service and 8.33% of monthly basic wage for employees who have served for longer.
The DIFC has issued a reminder that the deadline for appointing an employee and/or employer to the DEWS Supervisory Board is 15 January 2020.
Nominations should be accompanied with a valid DIFC employee card and the entity should be registered in the DIFC. The nominees should also have the appropriate qualified and experience.
The DEWS Supervisory Board will be made up of DIFC Authority representatives, employer and employee representatives and independent members. The Board will oversee the continuing governance and commercial aspects of the scheme which are not subject to regulatory supervision.
Dubai’s Multi Commodities Centre has announced various new rules and regulations. They will come into force on 2 January 2020. The aim is to make it easier to do business and set-up in the Centre. The new regulations update the Centre’s existing company law framework to provide greater flexibility and make it easier to operate for businesses registered with the Centre. Key amendments include increased flexibility around a company’s Articles of Association; the introduction of different share types, allowing businesses to tailor their shareholding structures; a new dormant status and an increased ability to transfer company incorporation in the Centre.
Elsewhere, the Chairman of Ajman Free Zone has announced it has launched a new Business Hub. It will be available to freelancers, entrepreneurs and businesses who operate in the Zone. It has been specifically designed to provide investors in the Zone with a comprehensive range of services.
The Crown Prince of Sharjah, Deputy Ruler of Sharjah and Chairman of the Sharjah Executive Committee has issued Sharjah Executive Decree No. 39/2019 which makes it mandatory for all government departments in Sharjah to first get approval from the Sharjah Media Office prior to using services offered by social media influencers.
According to the resolution, all government and semi-government entities, independent government agencies, companies that the government contributes to or fully owns and private contracting companies affiliated to the government within the scope of the contract, must obtain the approval of the Sharjah Media Office prior to using services provided by social media influencers.
Whether the services are for promoting activities, services or products for government entities, or are paid for or not paid for, the Sharjah Media Office must issue the necessary administrative decision prior to implementing the contracts signed with social media influencers.
The decree came into the effect from 4 December 2019.
Bahrain’s Bourse launched a public consultation on a proposed administrative fines framework. The consultation was launched on 24 November and ended on 5 December 2019. The proposed framework is being introduced in line with the Bourse’s Listing Rules which relate to their powers to impose administrative fines on issuers in the event of non-compliance with the Listing Rules and any other applicable rules, regulations and directives.
To ensure this power is used appropriately, the Bourse is proposing establishing a framework to impose administrative fines for non-compliance with the applicable rules, regulations and directives. The fines will vary depending on the impact and frequency of the violation. They will range between 500 and 10,000 Dinars for each violation and can be up to 100,000 Dinars for cross-listed companies exceeding 30% of an issuer’s share capital for each secondary market they are listed on. All cases will be assessed and reviewed by an Issuer Violation Committee which will be established by the Bourse.
Saudi Arabia signs new agreement to nationalize thousands of jobs in the industrial sector. The Ministry of Labour and Social Development, represented by its deputy minister, Abdullah Abu Thunain, signed a memorandum of understanding (MoU) with the Ministry of Industry and Mineral Resources, the Technical and Vocational Training Corporation, the Saudi Human Resources Development Fund, and the Council of the Saudi Chambers.
The MoU establishes a partnership aimed at raising Saudization rates and promote the private industrial sector by nationalizing over 35,982 jobs in the industrial sector by 2021, after activating programmes and incentives supporting employment and training of nationals.
The UAE’s President has issued a Decree amending the Federal Labour Law. Federal Law No. 8/1980 has been amended by Federal Decree-Law No. 6/2019. It was issued on 29 August and came into force one month after its publication in the Official Gazette.
Under the amendments, it will be illegal to dismiss pregnant women. If they do, the employee will be considered to have been arbitrarily dismissed under Article 122 of Federal Law No. 8/1980. The amendments also ban discrimination in jobs with the same functions or discriminate between people.
The Human Resources and Emiratisation Minister will issue decisions regulating work where men and women cannot both be employed.
Weekly Spotlight: New Consultation by the Dubai Financial Services Authority on a Proposed Listing Regime for SMEs
The Dubai Financial Services Authority has launched a consultation on a proposed listing regime for SMEs. The consultation ends on 12 January 2020. If approved it will allow SMEs to list their shares on an Authorised Market Institution in the DIFC by providing appropriate and proportionate regulatory standards and adequate levels of investor protection. The proposals will be of interest to potential SME applicants, people who operate or intend to operate an Authorised Market Institution or ATS which facilitates trading in the shares of an SME, people providing legal, accounting, audit, or compliance services to SMEs in the DIFC or those who wish to provide these services and potential investors in listed SMEs.
It will allow SME companies to obtain equity financing through the capital markets, bridging a funding gap and compared to the established equity listing regime, to list with less than three years’ track record and benefit from lower fees when filing a Prospectus for approval and appoint a compliance adviser, rather than a sponsor, to assist it in complying with Authority requirements at application and on an ongoing basis. An SME applicant will have to produce a prospectus which complies with the Markets Law 2012 and Markets Rules, to be approved by the Authority, unless there is an exemption from the obligation to do so. Disclosure requirements will not apply to an SME applicant because of, among other things, its size and nature or limited years in operation.
SMEs will be able to list using their existing audited historical financial statements, prepared in line with their national audit and accounting standards, on the basis those standards are acceptable to the Authority. SMEs will have to produce audited accounts prepared in line with IFRS (or other standards acceptable to the Authority) and auditing standards of the IAASB (or other standards acceptable to them) for the next and subsequent financial years. Listed SMEs will have to comply with the existing requirements under the Markets Law and Markets Rules in respect of inside information and disclosure, including disclosure of interests by Connected Persons and of Directors’ material interests.
A listed SME, like any other Reporting Entity, should have a corporate governance framework in place at the time of listing. The Authority’s ‘comply-or-explain’ corporate governance regime is already designed to provide a degree of flexibility and it is expected it will permit a SME to achieve the outcomes intended while considering the nature, scale and complexity of their business. To accommodate the change, a definition of an SME will be introduced as will minimum market capitalisation requirements for regular listings. They will also need to have a trading record. In addition, there will be a lock-in arrangements, prohibitions on share repurchases, website disclosures and the appropriate fees. Finally, they will have to have a compliance advisor.
The UAE’s Central Bank has announced it will establish a FinTech Office. The Office will help draft regulations for this sector and encourage it to grow. It will also examine assets like cryptocurrencies. It will not compete with other initiatives like the sandboxes in the financial free zones.
The Governor of the Central Bank made the announcement at the Middle East Banking Forum in Abu Dhabi. He added ‘the aim of the office will be to position the Central Bank as the coordinating authority, as an author of prudential and market conduct regulatory requirements and as an enabler and facilitator of fintech activities in the UAE. It will ensure financial innovation continues in the banking sector with the support and facilitation of the national authorities’.