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The UASA issues new guidelines


 Published on: 13-Oct-2019

The Union of Arab Securities Authorities issued a number of guidelines related to the achievement of harmony and convergence among the Members’ legislations, these guidelines fall within the objectives and initiatives of the UASA Strategic Plan for the period 2016-2020. The relevant working group in cooperation with the Union General Secretariat prepared these guidelines in light with the decision of UASA Board in this regard at its twelfth meeting held in Beirut, and taking into consideration the Board recommendations at its thirteenth meeting held in Amman and the comments received from the UASA members.
 
These initiatives include the issuance of guidelines for “Disclosure of Listed Companies”, “Minimum Requirements for Companies Operating in Capital Markets”, and “Issuance and Listing in the Arab Financial Markets” as well as a the issuance of General Rules / Models for insider trading in accordance with the best international standards and practices.
 
It is worth mentioning that these rules will serve as guides to increase harmony and convergence between the UASA Members, and contribute to promote and strengthen the flow of investments among the members countries.
 
These guidelines are:
 
Guidelines for the minimum requirements for entities working in the Arab financial markets

The issuance of the guidelines for the minimum requirements for entities working in the Arab financial markets is based on the decision of the Union of Arab Securities Authorities (UASA) regarding the implementation of the objectives and initiatives of the strategic plan. One of its main areas of focus was achieving harmony between the legislations and regulations of the Union members in order to develop guidelines to improve the professional level of the entities working in the Arab financial markets. In light of the decision of the Union Board in this regard at its twelfth meeting held in the city of Beirut, a working group was formed to prepare this guide in collaboration with the General Secretariat of the Union, to establish a general framework of the minimum requirements to be met in the entities working in the financial markets.

Within this framework, the working group reviewed the legislations and regulations of the Union members, in order to determine the minimum requirements that should be met in the financial services companies operating in the Arab financial markets, where a manual has been drafted to follow as a general guideline that represents the minimum requirements to be met in the entities working in the financial markets.

It is worth mentioning that this guide has merely set a general framework for the minimum requirements to be met by the entities operating in the financial markets without going into the details related to securities business and activities in terms of the requirements needed to be registered, or the conditions and qualifications of the requirements to be registered for the licensees and other related details. This is due to the differences in classification used by the UASA members despite their agreement on the content and nature of the work of each requirement.

The guidelines included the establishment of a general framework and principles applicable to licensed companies, as well as the standards set by regulators and that are applied to the licensed companies, capacity and appropriateness standards, financial eligibility standards, competence standards, integrity standards, honesty, compliance standards and information leakage arrangements standards. It also included criteria for customer funds and assets as well as criteria for the relationship with the customer.

The guidelines also covered aspects related to the functions of registration and general requirements for practicing business; this includes licensing requirements, the powers of regulators regarding the application, the continuation of licensing, change and amendment, the responsibilities of registered persons, cancellation of registration, and the powers of regulators to audit the accounts of a licensed establishment.

The guidelines also included aspects related to record-keeping, cessation of business and revocation of a license, as well as penalties. The guidelines also included a special annex that includes the documents required for licensing securities business.


Guidelines for issuance and listing in the Arab financial markets

The issuance of guidelines for issuance and listing in the Arab financial markets is consistent with the objectives of the Union of Arab Securities Authorities (UASA) to upgrade the legislative and regulatory level of the Arab securities markets in a manner that establishes fairness, efficiency and transparency, as well as to unify efforts to reach effective levels of control over transactions in securities markets; in addition to achieving cooperation and coordination between the members of the Union to achieve maximum harmony and unison concerting the relevant laws and regulations. The issuance of these guidelines is in line with the objectives of the Strategic Plan of the Union for the years 2016-2020, where the plan for the aspect of harmony and unison between the legislation and regulations of the Union Member, aims to develop guidelines and guidelines for the issuance and listing for the members of the Union.

Within this framework, the team formed by the UASA Board at its 12th meeting held in Beirut in 2018 in cooperation with the General Secretariat of the UASA, has prepared guidelines and general principles relating to the initial issuance and listing for the Union Members. The team based their preparation of said guidelines on the efforts of a number of Arab and regional authorities in this field, including the General Secretariat of the Gulf Cooperation Council (GCC) and the International Organization of Securities Commissions (IOSCO) in addition to the legislation in force of the Union members and others.

The guidelines related to issuance included determining the documents related to offering, the appointment of the parties to the offering, as well as provisions relating to the offering that did not require a prospectus, as well as the offering procedures and publishing information. The guidelines also included a chapter on guidelines for issuing and suspending investment funds. As for the guidelines related to listing, it included setting the conditions for listing, suspending listing, listing fees, listing of bonds and listing of funds, in addition to establishing guidelines related to listing and trading of foreign issuances.

It is worth mentioning that the strategic plan of the UASA has confirmed that the issuance of such rules will be a mere guideline to assist Union members to enhance harmony between the different Arab legislations that govern the issuance, public offering and listing, which contributes to promote the flow of investments between UASA members.


Guidelines for disclosure of the listed companies in the Arab financial markets

Disclosure systems ensure the balance of financial markets, protect investors and increase their confidence by disclosing the expected risks that may affect corporate policies. It also enables investors to make timely investment decisions, which contributes to the effectiveness of the financial markets, supports liquidity ratio and facilitates communication between companies and investors. A strong disclosure system can help attract foreign capital and investors and maintain confidence in the financial market. On the contrary, poor disclosure and opaque practices can cause distrust and imbalance in financial markets, adversely affecting businesses, investors and the economy in general.

In recent years, the disclosure process has been managed by regulators, in addition to the issuance of a number of standards and norms by international organizations related to financial markets such as the Organization for Economic Cooperation and Development (OECD), the International Organization of Securities Commissions (IOSCO) and the Islamic Financial Services Board (IFSB) that issued the guidelines related to the disclosures of Sukuk and Islamic collective investment programs.

In the context of the continued expansion of the number of disclosure legislations, their overlap, inconsistency and weak effectiveness could be observed. Therefore, the issuance of guidelines for disclosure can make the legislations of the member states of the Union of Arab Securities Authorities (UASA) stronger and more effective, while working to encourage voluntary disclosure of companies in addition to mandatory disclosure determined by legislation. In the light of international experience in this field, there are limitations to mandatory disclosure, which is based on legislation that cannot cover practically all the information to be disclosed. Therefore, mandatory disclosure is the minimum, and companies must voluntarily disclose more than it is required under the legislation in force.

Within this framework, the UASA started preparing for the creation of common guidelines for disclosure and trading based on inside information for adoption by the members of the Union. These guidelines have been incorporated within the framework of the implementation of the strategic plan initiatives of the Union for the period 2016-2020, in order to achieve the objectives of the Union to improve the legislative and regulatory level of Arab stock markets to achieve fairness, efficiency and transparency, and unify efforts to reach effective levels of control over transactions in the Arab stock markets and to achieve maximum harmony and compatibility levels with regard to the relevant laws and regulations.

These guidelines have been prepared by the working committee in cooperation with the General Secretariat of the UASA, based on the best practices adopted by the members of the Union and on an international level. The development of these guidelines was also based on the results of a number of surveys and studies issued by the General Secretariat of the Union on transparency and governance of companies listed in the Arab financial markets, and rules on transparency, corporate governance and disclosure issued by a number of regional and international bodies such as the Gulf Cooperation Council and the Organization for Economic Cooperation and Development (OECD) The International Organization of Securities Commissions (IOSCO), the Bank for International Settlements (BIS), the International Governance Network (ICGN) and the Islamic Financial Services Board (IFSB).

The guidelines included aspects relating to disclosure of financial information, disclosure in the report of the Board of Directors, disclosure of material events, disclosure of ownership of securities and continuing disclosure. A chapter is also devoted to the guidelines related to inside trading, as well as fines and enforcement. The guidelines also included a special summary whereby events and information that were announced through continuous disclosure were identified. It is worth mentioning that a guide has been issued on the procedures to be followed to reduce the trading violation based on inside information and the forms used to disclose inside information.

 

The Guidelines are available in Arabic language through the flowing link: http://uasa.ae/ar/uasa_publications_studies.aspx
 
 

 

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