News & updates

Price Stabilisation in UAE Capital Markets: From Regulatory Ambiguity to Statutory Certainty

Over the past more than five years, price stabilisation has occupied an uneasy space at the intersection of market integrity, investor protection, and practical capital-markets execution. Universally recognised as a necessary tool to support orderly trading following equity offerings, stabilisation has nevertheless often operated under a cloud of legal ambiguity, particularly in jurisdictions where market-manipulation prohibitions are broadly framed and carry criminal sanctions.

In the United Arab Emirates, that ambiguity has now been decisively resolved.

The promulgation of Federal Decree-Law No. 33 of 2025 (the New Law) marks a significant inflection point in the legal treatment of price stabilisation. For the first time, UAE legislation expressly recognises stabilisation activities conducted in accordance with regulatory controls as lawful, carving out a clear statutory exemption from market-manipulation provisions under the Commercial Companies Law No. 32 of 2021 (the CCL).

This development is not merely technical. It represents a material evolution in the UAE’s capital-markets framework—one that strengthens legal certainty, aligns statutory law with regulatory practice, and enhances the attractiveness of the UAE as a sophisticated listing venue.

Understanding Price Stabilisation: A Necessary Market Mechanism

Price stabilisation is a post-offering mechanism designed to mitigate abnormal volatility following the listing of securities, particularly in initial public offerings (IPOs). Conducted typically by a stabilisation manager (often an underwriter or bookrunner), stabilisation involves limited market intervention—usually through secondary market purchases—to support the trading price of a newly listed security during a defined stabilisation period.

The purpose is not to artificially inflate value, but to prevent disorderly trading conditions caused by short-term supply-demand imbalances, information asymmetry, or speculative pressure immediately after listing. Globally, stabilisation is recognised as a legitimate and regulated practice, subject to strict controls, transparency requirements, and time limitations.

Yet despite this global consensus, stabilisation has historically faced legal vulnerability in jurisdictions where statutory prohibitions against influencing market prices are drafted in absolute terms.

The UAE was one such jurisdiction, until now.

The Pre-2025 Legal Landscape: Article 355 and the Risk of Overreach

Prior to the issuance of the New Law, the primary statutory provision governing market manipulation in the UAE was Article 355 of the Commercial Companies Law No. 32 of 2021.

Article 355 provides:

“Shall be punished by imprisonment for a period not exceeding (6) six months and a fine of no less than (1,000,000) one million dirhams and not exceeding (10,000,000) ten million dirhams with the return of the realised profit, or either of these two penalties, every chairman or Board Member of a Company or any of its employees who participates, directly or indirectly, with any entity that makes transactions intended to cause an effect that does not reflect the true value of the Securities issued by the company.”

The breadth of this provision is immediately apparent. Any transaction “intended to cause an effect that does not reflect the true value” of securities could, on its face, fall within its scope. Crucially, Article 355 does not contain an express carve-out for price stabilisation activities conducted in the context of an equity offering.

This absence created a structural tension.

Price stabilisation, by its very nature, is intended to influence price behaviour, at least in the short term. While economically justified and internationally accepted, stabilisation could arguably be characterised as producing a price effect that does not purely reflect immediate market forces. Under a literal reading of Article 355, this created potential exposure for stabilisation managers, issuers, and even directors, to criminal sanctions.

Regulatory Practice vs Statutory Silence

Notwithstanding the absence of a statutory exemption under Article 355, UAE regulators had long treated stabilisation as lawful when conducted in accordance with prescribed rules.

Most notably, the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) issued detailed written rules governing stabilisation (the Price Stabilisation Rules). These rules set out the conditions, mechanics, and disclosure obligations applicable to stabilisation activities.

The issuance of these rules was not incidental. It reflected DFM’s and ADX’s considered view that stabilization, when carried out transparently and within defined parameters, does not constitute market or price manipulation of the kind prohibited by Article 355.

Further reinforcing this regulatory position was the role of the Securities and Commodities Authority (now the Capital Market Authority (CMA)). Stabilisation disclosures are a standard feature of UAE IPO prospectuses, which are subject to rigorous review and formal approval by the CMA. It is widely understood that the CMA would not approve a prospectus containing stabilisation disclosures if it considered the proposed mechanism to be unlawful or incompatible with the CCL.

Yet, despite this strong regulatory signalling, a legal asymmetry remained: the permissibility of stabilisation rested on regulatory practice rather than express statutory authority.

The New Law: Article 37(2) and the Statutory Breakthrough

That asymmetry has now been resolved.

Article 37(2) of Federal Decree-Law No. 33 of 2025 provides:

“A person’s practice of price stabilisation controls and procedures or mechanisms for which controls have been issued by the Authority or Capital Market Institutions shall not constitute a breach of the provisions of this Decree-Law and the Related Legislation or the Companies Law regarding the prohibition of influencing the price of a Security or Foreign Security listed on the Market.”

This provision is both precise and powerful.

For the first time, UAE legislation expressly confirms that price stabilization, when conducted in accordance with controls issued by the CMA or capital-market institutions, does not constitute a breach of prohibitions on influencing securities prices under the Companies Law or related legislation.

In effect, Article 37(2) operates as a statutory safe harbour.

A Statutory Exemption from Article 355

The practical impact of Article 37(2) cannot be overstated. It constitutes a clear statutory exemption for stabilisation managers and other participants from the criminal liability regime under Article 355 of the CCL.

Where previously stabilisation relied on regulatory acceptance and purposive interpretation, it is now explicitly protected by law. Transactions carried out in compliance with stabilisation controls are no longer vulnerable to recharacterisation as unlawful price manipulation.

This represents a fundamental shift, from implied tolerance to express legislative endorsement.

Why This Matters: Legal Certainty and Market Confidence

The introduction of Article 37(2) delivers several critical benefits to the UAE capital markets.

1. Legal Certainty for Market Participants
Stabilisation managers, underwriters, issuers, and directors now operate within a clear statutory framework. The risk of criminal exposure for activities conducted in compliance with regulatory rules has been materially reduced.
This certainty is essential for international financial institutions, which are acutely sensitive to criminal liability risks in cross-border transactions.

2. Alignment Between Statute and Regulation
The New Law harmonises statutory provisions with long-standing regulatory practice. It formally validates the approach taken by DFM and ADX and the CMA, closing the gap between written law and market reality.

3. Strengthening IPO Execution
Price stabilisation is a cornerstone of modern IPO execution. By safeguarding stabilisation practices, the New Law enhances the robustness of post-listing trading, supports orderly markets, and protects investor confidence.

4. Competitiveness of UAE Capital Markets
In a global environment where issuers can choose from multiple listing venues, legal clarity matters. The New Law reinforces the UAE’s position as a mature, predictable, and internationally aligned capital-markets jurisdiction.

A Broader Signal: Regulatory Sophistication

Beyond stabilisation itself, Article 37(2) sends a broader signal about the UAE’s legislative direction.

It reflects a nuanced understanding of market mechanics and a willingness to legislate with precision rather than prohibition. Rather than criminalising conduct in the abstract, the law now distinguishes between abusive manipulation and regulated market-support mechanisms.

This is the hallmark of advanced capital-markets regulation.

To conclude, the legal treatment of price stabilisation in the UAE has evolved from ambiguity to certainty.

Under the pre-2025 regime, stabilisation existed in a legally fragile space, tolerated in practice, but not expressly protected by statute. With the enactment of Federal Decree-Law No. 33 of 2025, that fragility has been eliminated.

Article 37(2) provides a clear, unequivocal statutory exemption, shielding stabilisation activities conducted in accordance with regulatory controls from the market-manipulation prohibitions of the Commercial Companies Law.

For issuers, underwriters, regulators, and investors alike, this is a welcome and overdue development, one that strengthens confidence, supports market stability, and underscores the UAE’s commitment to world-class capital-markets governance.

Ahmed Ibrahim
Managing Partner
IN’P IBRAHIM .N. PARTNERS