The CCL has introduced a raft of changes to facilitate capital markets transactions. Further SCA regulation will flesh out the detail of the CCL provisions. Some of the key changes in this area include:
- Reduction in the mandatory minimum free float for listed PJSCs: the CCL requires between 30% and 70% of the shares to be publicly offered, compared with 55% to 80% under the Old CCL.
- Secondary offers (offers for sale) now permitted: Article 279 of the CCL now permits shareholders of a company converting into a PJSC to sell a maximum of 30% of the company's capital in the IPO.
- Provisions permitting and facilitating book-building, underwriting and trading in nil-paid rights on a rights issue (the SCA has recently published draft regulations in relation to IPOs for public consultation).
- Issuances to strategic investors: shares may be issued to "strategic investors" outside of the pre-emption regime.
Provisions encouraging IPOs
The fact that the founders can now retain up to 70% – and therefore control – of their companies may encourage more local businesses to consider an IPO. The sell-down provision is also helpful, in that it provides a partial exit route for the founders at the time of listing. The 30% cap, together with the retention of the 2-year lock-up period, are understandable protections in a UAE context: in a market with a large, less sophisticated retail investor base, it is not unreasonable to require the founders to stand behind their company for a period of time post-listing.
Prarthna Chaddha, Partner
The UAE Commercial Companies Law In Focus: Capital Markets
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