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Listing of UAE local companeis on foreign exchanges
??On 30 January, Dubai's ruler Sheikh Mohammed Bin Rashid Al Maktoum issued a decree ("Decree") obliging Dubai based companies to list their shares on Dubai stock exchanges (i.e. Dubai Financial Market or Nasdaq Dubai) ("Dubai Exchanges") before listing on any other stock exchanges. As a result of numerous announcements in local newspapers and news digital platforms about the Decree, there have been many speculations between legal and financial advisors about the ability of UAE based limited liability companies to pursue an IPO and list on one of the international stock exchanges.
On 4 February, the Decree was published in the UAE Official Gazette to unveil its scope and magnitude, as well as its effect on Dubai based companies. This note aims to shed light on the main aspects of the Decree, its scope of application and the expected reactions towards it.
Scope of application:
- The Decree primarily applies to all public joint stock companies that are/will be established in Dubai and Dubai based private joint stock companies targeting to list on the Second Market.
- As per the Decree, these companies must first list on one of the Dubai Exchanges, but at the same time opens the door for these companies to list on international stock exchanges.
- Despite the absence of any legislation regulating the dual listing of publicly listed companies on more than one UAE local mainland markets, the Decree allows Dubai based listed companies to dual list on other UAE local mainland markets, i.e. the Abu Dhabi Securities Exchange.
- The scope extends to UAE based companies that generate at least 50% of its profits or financial returns from practicing activities in Dubai.
Foreign Companies:
- Foreign companies established outside of the UAE are allowed to list on Dubai Exchanges, either as primary or secondary market.
Listing on International Stock Exchanges:
- The most pressing question raised by financial advisors and investment bankers is whether limited liability companies incorporated and established in Dubai will be allowed to pursue an IPO on one of the international stock exchanges.
- The scope of application of the Decree does not extend to limited liability companies, and thus pursuing an IPO by limited liability companies on international stock exchanges is still an available option, until now.
Questions remain:
- Will the scope of application of the Decree remain the same or will it be extended to limited liability companies?
- How the Dubai Economic Development will interpret the Decree and how they will react toward Dubai based limited liability companies when pursuing an IPO and listing on international stock exchanges.
Office Information:
- Dubai Office: Office 503, Maze Tower, Sheikh Zayed Road, Dubai, UAE
- Abu Dhabi Office: 24th Floor, Al Sila Tower, ADGM Square, Abu Dhabi, UAE