The Securities and Commodities Authority has reported that there are nine main steps and requirements, to give public shareholding companies approval to buy their shares at a rate not exceeding 10%, with the intention of reselling them when the market conditions improve, after fulfilling the conditions and requirements mentioned in each of the Authority’s Board of Directors Decision No. (40) of 2015 Regarding the controls and procedures related to the company's purchase of its shares for the purpose of resale, and the provisions of Federal Law No. (2) of 2015 regarding commercial companies.
The Authority clarified, in a recent awareness bulletin that Emirates Today obtained a copy of, that the estimated time for approval of the application is nine working days from the date it was received, fulfilling the conditions and requirements, detailing the steps accordingly:
1. Initial approval
These include submitting to the authority for initial approval of the general assembly invitation to consider approving the company's purchase of its shares, and completing the procedures for holding the company's general assembly meeting.
2. Approval of the purchase
Submit the authority with the request to approve the company's purchase of its shares, along with all the documents attached. The company announces to the public the procurement process in two widely circulated local daily newspapers, one of which is in the Arabic language at least, according to the authority’s model, then discloses the procurement process, and notifies both the authority and the concerned market after implementing the purchase process, taking into account the subsequent obligations stipulated in the decision of the Board of Directors Authority No. (40) for the year 2015 regarding controls and procedures related to the company's purchase of its shares with a view to reselling them.
3. Selling the shares purchased
Both the Securities and Financial Market Authority must be notified of the date of the board meeting that will discuss the company's sale of its purchased shares (treasury shares), at least two working days before the date of the meeting.
The Authority and the concerned market must be notified of the date of executing the sales operations, taking into account the post-sale obligations, as stipulated in the Authority’s Board of Directors Decision No. (40) of 2015 regarding the controls and procedures related to the company's purchase of its shares with a view to reselling them.
The 6 requirements
The "Securities" bulletin indicated that there are six basic requirements and conditions that must be met to agree to the company's request, which are:
1 The company may not mortgage its shares, or buy those shares, unless the purchase is to reduce the capital, or to consume the shares, and then these shares do not have a vote in the general assembly’s deliberations, nor a share in the profits.
2 that the incorporation of the public joint-stock company listed on the financial market has been at least two fiscal years, and that it has issued two audited budgets, approved by the company's general assembly.
3 That it has passed since the last sale of shares previously purchased (if any), for a period of no less than a year.
4 The purchase percentage shall not exceed (10%) of the shares representing the paid up capital of the company.
5 Issuing a special decision from the company’s general assembly to approve the purchase with a view to reselling, with the company’s board of directors being authorized to implement the general assembly’s decision within the period agreed by the authority to implement the purchase, and to reduce the company's capital in the event of the deadline set by the body, to sell the shares purchased from During the cancellation of those shares, with the amendment of the company’s capital in the articles of association.
6 The company may not make the purchase, except after six months have passed from the last issue of any securities in a public offering.
Initial approval documents
- A draft general assembly invitation, including the formula for the special item
The company purchases its shares.
- The company's board of directors decision approving the company's purchase of its shares, indicated
It contains the reasons for buying, and the percentage of shares that the company wants to buy.
The purchase process plan that details the purchase process, in terms of
Quantities, dates and purchase price.
Purchase approval documents
Request to approve the purchase of the company, according to the form specified by the authority attached to it:
- A pledge from the company to fulfill the obligations resulting from the approval of the authority, regarding
The process of buying with intent to sell.
- Declaration by the company’s board of directors and auditors, that the companies are
The affiliate does not own any shares in the company.
- A copy of the minutes of the company's general assembly meeting, which includes approval
Shareholders under a special decision on the purchase with a view to resale.
Approval of the Central Bank, if the company is licensed by it.
The format of publicly announcing the purchase in two daily newspapers
Two localities are widespread, at least one of them in Arabic
Post - Purchase Disclosure Form.
Stock sale documents
- The company's board of directors decision approving the sale of the purchased shares.
- The subsequent disclosure of the sale, according to the form prepared by the Authority