ID :
24422
Tue, 10/14/2008 - 16:29
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Shortlink :
https://www.oananews.org//node/24422
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Cabinet mandates ESCA to exempt some firms from share buy-back rules
Abu Dhabi, Oct 14, 2008 (WAM) - The Cabinet has approved a bill which empowers the Emirates Securities and Commodities Authority (ESCA) to exempt all public joint stock companies from the rules and regulations governing the re-purchasing of their shares as demanded by Article 168 of Commercial Companies Law and all its amendments, but this shall be done only when the ESCA deemed that necessary.
According to Economy Minister, Sultan bin Saeed Al-Mansouri, who is also the ESCA Board Chairman, the cabinet took the decision to make it easy for those companies to buy-back their shares whenever their strategic policies demanded so. He said it also aims at making it more flexible to implement such a decision in view of the current global financial crisis and economic situation.
The minister has given directives for the setting up of a committee of experts to look into the applications of public joint stock companies interested in buying back their shares to enable a quick deliberation and decision on their demands, taking into consideration the interest of both the company and its share holders on the stock market.
The cabinet decision is in line with the ESCA commitment to support local stock markets and to meet the demand of many companies demanding to buy back their shares without being restricted by some rules in Article 169 of the Commercial Companies Law. It is also in view of the extraordinary situation currently being faced by international stock markets and part of the efforts by the various UAE government bodies to overcome the global crisis caused by external factors which has nothing to do with UAE's internal economic situation, the performance of the companies or the country's financial and banking systems.
An official source from the ESCA said the rules and regulations regarding the buy-back of shares will be implemented in normal situation, adding that the implementation will not be tied to any tough rules or procedures.
The source pointed out that consideration would be given to professional aspects when it comes to the implementation of the Cabinet-approved exemption. The source said this will be done in a way that will not negatively affect trading on the stock market, while preventing, at the same time, any abuse of the cabinet decision to engage in speculations on the stock markets.
It's worth noting here that the ESCA is currently promulgating rules and regulations which will govern the process of companies buying back their shares. According to the rules, a company willing to buy back its shares shall announce that in two daily newspapers, including one in an Arabic daily, the size of the announcement shall cover, at least, a quarter of a page, the announcement shall precede the actual buy-back date by a period not less than two weeks, a copy of the two newspaper announcements shall be submitted to the ESCA and the buy-back process shall not be done within 15 days before and three days after the announcement of the audited annual financial results of the company.
According to Economy Minister, Sultan bin Saeed Al-Mansouri, who is also the ESCA Board Chairman, the cabinet took the decision to make it easy for those companies to buy-back their shares whenever their strategic policies demanded so. He said it also aims at making it more flexible to implement such a decision in view of the current global financial crisis and economic situation.
The minister has given directives for the setting up of a committee of experts to look into the applications of public joint stock companies interested in buying back their shares to enable a quick deliberation and decision on their demands, taking into consideration the interest of both the company and its share holders on the stock market.
The cabinet decision is in line with the ESCA commitment to support local stock markets and to meet the demand of many companies demanding to buy back their shares without being restricted by some rules in Article 169 of the Commercial Companies Law. It is also in view of the extraordinary situation currently being faced by international stock markets and part of the efforts by the various UAE government bodies to overcome the global crisis caused by external factors which has nothing to do with UAE's internal economic situation, the performance of the companies or the country's financial and banking systems.
An official source from the ESCA said the rules and regulations regarding the buy-back of shares will be implemented in normal situation, adding that the implementation will not be tied to any tough rules or procedures.
The source pointed out that consideration would be given to professional aspects when it comes to the implementation of the Cabinet-approved exemption. The source said this will be done in a way that will not negatively affect trading on the stock market, while preventing, at the same time, any abuse of the cabinet decision to engage in speculations on the stock markets.
It's worth noting here that the ESCA is currently promulgating rules and regulations which will govern the process of companies buying back their shares. According to the rules, a company willing to buy back its shares shall announce that in two daily newspapers, including one in an Arabic daily, the size of the announcement shall cover, at least, a quarter of a page, the announcement shall precede the actual buy-back date by a period not less than two weeks, a copy of the two newspaper announcements shall be submitted to the ESCA and the buy-back process shall not be done within 15 days before and three days after the announcement of the audited annual financial results of the company.
