UAE amends law to boost capital markets

Jan 30, 2019
Trading agencies ruling change aims to increase number of public companies

The UAE has adopted an amendment to the country’s Commercial Agencies Law that will allow trading agencies to convert into public shareholding companies, potentially creating greater opportunities for the region’s capital markets.

Trading agencies are created when a UAE entity, typically a family-owned business, enters into an agreement with international agents or distributors. The law change will allow trading agencies to raise funds from local stock markets and, according to the UAE government, ‘contribute to the inclusion of more companies in the capital markets of the UAE and encourage citizens to do business or invest in public shareholding companies.’

It is expected to be good news for investors and local markets. ‘The move will create more investment opportunities and the secondary markets will get a boost in the longer term,’ says Faisal Hasan, head of investment research at United Gulf Bank subsidiary KAMCO Investment, in a statement.

The decision is the latest in a series of measures – including a bankruptcy law and permitting 100 percent foreign ownership of companies – taken by the UAE government to boost the economy.

It is, for Charles-Henry Monchau, managing director, CIO and head of investments at Al Mal Capital, a subsidiary of Dubai Investments, the latest initiative to boost Dubai as a financial center.

‘In our view, along with a pro-business environment, excellent infrastructure, loose fiscal policy and political stability, [this law change] positions [Dubai] as one of the preferred investment destinations,’ he says in a statement.  

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