ADX and SCA Regulations - Listing Requirements | STA Law Firm

Part I: Abu Dhabi Securities Exchange - Investment Requirements

Introduction

Investing, as Warren Buffett, the legendary investor, describes, "…the process of laying out money now to receive more money in the future." It is a way to put money away when you're occupied with other things and make it work for you so that you can enjoy the full benefits of your labour in the future. Investing is a way of achieving a happier outcome. The aim of investing is to put your money into one or more forms of investment funds in the hopes of increasing its value over time.

A stock market is a marketplace where investors can buy and sell stocks (or shares) in a company. Companies divide their shares and exchange them, allowing the general public to purchase and sell them. Since they own a piece of the stock, the investors profit a certain amount if the company does well. It is recommended that you make a long-term investment of at least 5 years in order to make a fair profit.

Companies must list themselves on a stock exchange in order for investors to purchase their stock. The majority of large corporations will have their shares traded on a stock exchange. The Stock Exchange of the United Arab Emirates is very close to every other stock exchange in the world. The stock exchange houses in the UAE list well-known companies such as Emirates NBD, Oman Insurance Company, Emaar Properties, and 200 other public limited companies. International companies will register and make their stocks available to the public through the stock exchange centres in the UAE.

Securities and commodities

In the year 2000, the UAE created the Securities and Commodities Authority (SCA) to achieve the following goals;

• To provide the ability to invest savings and funds in Securities and Commodities in a way that benefits the national economy, ensures transaction integrity and precision, ensures the interaction of supply and demand to decide rates and protects investors by creating the foundations for sound and just dealings between different investors.
• Conducting studies and making suggestions to raise investor awareness.
• To contribute to the financial and economic stability of the country.

The Securities and Commodities Authority (SCA) regulates two major financial securities exchange markets in the UAE:

• Abu Dhabi Securities Exchange
• Dubai Financial Market  

Abu Dhabi Securities Exchange (ADX)

The Abu Dhabi Securities Exchange Company was established on March 17, 2020, under Law No. 8 of 2020 Concerning the Abu Dhabi Securities Exchange Company "PJSC," and was registered as a public joint-stock company in Abu Dhabi. It is wholly owned by the Abu Dhabi Government. The Company became wholly owned by Abu Dhabi Developmental Holding Company Public Joint Stock Company under Law (02) of 2018 and Executive Council Resolution Number (33) of 2020.

It trades stocks of companies based in the United Arab Emirates. Ras Al Khaimah, Al Ain, Fujairah, and Sharjah are among its locations. It trades companies from a variety of industries, including banking, insurance, services, manufacturing, and hotels. Transparency, honesty, performance, and customer-centricity are among the ideals it promotes. 

The Abu Dhabi Securities Exchange (ADX) aspires to be a creative, appealing, and open marketplace that empowers the UAE economy by providing opportunities to invest savings and funds in securities, ensuring the soundness and accuracy of transactions, determining prices through the interaction of demand and supply, and protecting investors through fair and proper dealing principles.

By conducting research, ADX raises investment awareness and ensures that savings are invested in productive sectors. It promotes financial and economic stability while also developing trading methods to improve the liquidity and price stability of all securities traded on the market.

Market overview 

The Abu Dhabi Securities Exchange (ADX) is a platform for trading securities, such as shares issued by public joint-stock companies, government or corporate debt instruments, exchange-traded funds, and other financial instruments authorized by the UAE Securities and Commodities Authority (SCA). There are two markets on the Abu Dhabi Securities Exchange (ADX):

1. Main Market 
2. Second Market 

1. Main Market 

After a company has sold its offering on the primary market, investors will buy and sell securities they already own on the ADX main market. In the ADX main market, a broker usually buys securities on behalf of an investor, but the number of securities exchanged varies from day to day as supply and demand for the security fluctuate.

2. Second Market 

The ADX second sector is a part of ADX's existing infrastructure for private company listings. Investors can buy and sell private company shares based on fundamentals such as supply and demand, financial statements, and other filings.

How to become an investor in Abu Dhabi Securities Exchange  

The Clearing, Settlement, and Depository Department issues the investor number, which is a unique identifier for investors (CSD). All transactions on the Abu Dhabi Securities Exchange (ADX), including clearing, settlement, and trading, can be initiated using this number.

Investors may apply for an investor number on the Abu Dhabi Securities Exchange through one of the service channels mentioned below:

• Brokerage Firms with Accreditation
• Sahmi digital platform (for Emirates ID cardholders)
• Customer service offices present in all branches of the Abu Dhabi Securities Exchange.

The documents mentioned below are required to receive an investor number;

Individuals:

• Original Emirates ID card. (applicable only for UAE citizens and residents holding Emirate's identity)
• For foreigners who do not live in the UAE, a passport and ID card are required
• Original Emirates ID card. (For UAE citizens and residents holding Emirates identity)

Companies:

• A copy of a legitimate trade license (original for review)
• Contract for the formation of a company
• List of members of the company's Board of Directors for the most recent certified/audited duration
• A letter containing a list of all signatories who have been signed 
• Letter with the International Bank Account Number (IBAN)

Investment Portfolios: 

• The Central Bank of the United Arab Emirates has released a letter of approval to begin portfolio operations.
• A copy of the portfolio's commercial license issued by the portfolio's issuer (original for review)
• List of approved people's names and signatures from the portfolio, with powers, clarified 
• Portfolio prospectus 
• Letter with the International Bank Account Number (IBAN)

Free Zones:

• A copy of the license for the free zone (original for review)
• Company's board member's list for the last certified period 
• A letter containing a list of the approved signatories
• Letter with the International Bank Account Number (IBAN)

Documents issued outside the UAE

The documents issued outside the UAE must be notarized and authenticated by the following;

• The United Arab Emirates Embassy in the country where the document was released
• The country's Ministry of Foreign Affairs released the paper.
• The United Arab Emirates' Ministry of Foreign Affairs

How is the Abu Dhabi Securities and Commodities Authority (ADX) regulated? 

The Securities and Commodities Authority (SCA), a federal authority in the United Arab Emirates, regulates the Abu Dhabi Securities Exchange (ADX). The Securities and Commodities Authority (SCA) was created by Federal Law No. (4) of (2000), which governs the Emirates Securities and Commodities and Market.

How to trade in Abu Dhabi Securities Exchange

• The Abu Dhabi Securities Exchange will provide you with an investor number.
• Selecting and appointing a broker by:

• Reviewing the official website of the Abu Dhabi Securities Exchange and select a licensed brokerage firm from the list.
• Communicating with the chosen firm and provide them with the information they need.

• Start trading by placing orders to buy and sell stock. The investor can track the movement of shares on trading screens inside the Exchange, on the Exchange's official website, or via brokerage firm applications, and decide whether to buy or sell:

• Use the brokerage firm's official website to place sell and buy orders or download their mobile app.
• To inform a broker of entering orders, speak with him in person or over the internet.

ADX-registered businesses include:

• ADCB
• ADIB
• Etisalat 
• FAB
• Gulf Pharmaceutical Industries
• Finance House 
• Noor Takaful
• Qatar Telecommunications
• Union National Bank