Weekly Spotlight: New Decree Amending the UAE Federal Labour Law

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.

Weekly Spotlight: The UAE’s Central Bank has Announced it will Establish a FinTech Office

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’.

Weekly Spotlight: ADGM has announced new Employment Regulations 2019

The Registration Authority of Abu Dhabi’s Global Market has announced it has issued new Employment Regulations 2019 and Compensation Awards and Limits Rules 2019. The Regulations will come into force on 1 January 2020.

It follows a public consultation earlier this year on proposed amendments to the 2015 Regulations and have been drafted taking into account international standards.

The key changes introduced by the Regulations and Rules include new overtime provisions for employees, aligning certain employees’ entitlements with those onshore, including repatriation flight tickets and sick leave, changes allowing employers and employees more flexibility in negotiating notice periods, introducing protective provisions for those aged between 15 and 18 and introducing a discretionary power to the Market Courts to impose penalties on employers for failing to pay employees’ entitlements due on termination.

Weekly Spotlight: Draft Cryptoasset Regulations Published by UAE’s Securities and Commodities Authority

The UAE’s Securities and Commodities Authority has published draft cryptoasset regulations. Investors, brokers, financial analysts, researchers, media personnel and other interested parties have until 29 October to provide their feedback on them.

The Regulations will encompass all aspects of the crypto assets industry in the UAE ranging from token issuing requirements to trading and safekeeping practices with an emphasis on protecting investor interests to ensure compliance with financial crime prevention measures, cryptoasset sake-keeping standards, information security controls, technology governance practices and conduct of business requirements for all market intermediaries.

Standards and requirements for a wide range of market participants like issuers of securities, investors including qualified investors, custodians, crypto trading platforms, brokers and promoters engaged in crypto asset industry are also covered.

Once they are implemented, market participants will be able to request guidance on specific token issues and regulatory requirements from the Authority as a part of an e-Services System launched by them. The Authority may amend the draft regulations before, on or after this deadline as they are not final.

Weekly Spotlight: Launch in Dubai of a Virtual and Global Business License

Dubai’s Deputy Ruler has announced the launch of a virtual and global business license. It will be available to 101 countries and is the region’s first virtual business license. It will allow freelancers and business people across the world access to a regulated ecommerce platform and allow them to work easily with Dubai-based companies and explore new markets and investment opportunities remotely. It is hoped it is will bring more than 100,000 companies to the Emirate in the creative industries, technology and services sectors. Applications can be submitted to www.vccdubai.ae or through VFS Global offices in 11 locations globally.

Dubai Healthcare City-registered companies can now register onshore. They will only be able to register onshore if they have successfully applied for a no-objection certificate from the Dubai Healthcare City Authority-Regulatory and successfully obtained a commercial permit from Dubai’s Economic Development Department. The regulatory changes are part of new regulations developed by the City and the Economic Development Department.