The Minister of Economy, Chairman of the Board of Directors of the Securities and Commodities Authority, Sultan bin Saeed Al Mansoori, revealed the direction of the Securities and Commodities Authority to implement a new system for trading shares of troubled companies, which will come into effect soon, to ensure that trading in the shares of those companies is not stopped, considering that the new system will work To mitigate the damage caused by investors, by avoiding stopping trading on the shares of troubled companies, which will be subject to special supervision and follow-up.
In response to a parliamentary question during the Federal National Council session, which was held in Abu Dhabi yesterday, headed by Speaker of the Council, Saqr Ghobash, the Minister affirmed that the Authority has taken measures to ensure the maintenance of investors on the one hand, and the recovery of troubled companies on the other hand, whether companies that have lost less Out of 20% or that lost more than 50% of its issued capital, while the Council approved, during the session, two federal bills, the first on amending some provisions of Federal Law No. (18) for the year 1981 regarding the regulation of commercial agencies, and the second on organizing the strategic stock of food commodities In the state.
The session witnessed the sending of six questions to government representatives, the answer of five of which was postponed, based on two letters of apology and received by the Council, the first of the Minister of State for Financial Affairs and Vice-Chairman of the Board of Directors of the Federal Tax Authority, Obaid Hamid Al Tayer, about a question about the impact of the application of value added in Economy, and the second message from the Minister of State for Higher Education Affairs and Advanced Skills, Chairman of the Federal Authority for Government Human Resources, Dr. Ahmed Belhoul Al Falasi, who apologized for not attending to answer four questions, about the support provided to employees, parents of people of determination in the federal authorities, The localization of the profession of human resources manager in government institutions, the mourning license, and the conditions for accepting male students and children of female citizens at the university.
While answering a question from the list of the six questions, a member of the Council, Obaid Khalfan Al-Salami, addressed to the Minister of Economy and Chairman of the Board of Directors of the Securities and Commodities Authority, on “troubled or doubtful companies”, during which the Minister revealed the Authority’s study of applying a new system To trade the shares of troubled companies, it is guaranteed not to stop trading on the shares of those companies, in order to allow trading by creating a new trading list, called the Watch List on the stocks of troubled companies through it, without the need to stop trading, as the companies will be subject to special monitoring.
The minister added that the aim of the new mechanism is to enable investors to trade their shares in troubled companies with special controls and requirements.
The minister said: “The prospective system will mitigate the damage from investors by avoiding stopping trading on the shares of troubled companies, which will be subject to special control and follow-up, especially since this system includes five measures taken by the authority with a view to preserving investors, as well as the recovery of troubled companies.” Until the authority classified the companies into two categories, the first in which the losses ranged between 20% and 50%, while the second category is where the losses exceed 50% of its issued capital.
He explained that the first procedure for the second category companies (whose losses exceed 50%), is that the disclosure of their financial statements includes a detailed analysis of the losses, their amount and their ratio to the capital, their causes, the procedures that will be taken to address them, and obliging the market to place a red mark next to the company name On the trading screens, it is reported that the losses have reached this limit, and the authority may, according to the minister, suspend trading on the shares of the listed company whose accumulated losses have reached more than 50%, after consulting the market, until the company discloses a plan to address the accumulated losses.
He added: “In implementation of the requirements of the Commercial Companies Law, the boards of directors of local joint-stock companies, whose losses amounted to more than 50%, are required to call the general assembly of the company to convene within 30 days from the date of disclosing the losses, to take a special decision on the continuity of the company, and include the invitation to the general assembly The accumulated losses treatment plan, prepared by a body with technical and financial expertise approved by the authority, and those companies must form a committee to follow up the implementation of the accumulated losses plan, and disclose to the authority and the market details of the implementation of the plan.
He pointed out that the Authority expected four penalties for violating companies, namely, warning the company, signing a financial fine, stopping the trading of the company’s shares and canceling its listing, with the aim of motivating the company to address its financial situation, to avoid further deterioration and avoid stopping trading, and organizing procedures to address corporate losses, and provide the greatest amount of Protecting investors to rationalize their investment decision, indicating that the expected impact of that decision is to improve the performance of companies, provide more protection for investors, lower the rate of cases of stopping trading, and decrease the number of troubled companies whose losses exceed half of its capital.
He said: “With regard to the second procedure, the authority issued a decision to update the controls of corporate governance in public joint-stock companies, in line with global best practices and developments in global financial markets, to enhance corporate governance and transparency practices in companies, as it included provisions for risk management and the procedures in place thereof, with a view to strengthening Corporate Governance, Transparency and Risk Management Practices in Companies, and Investor Awareness ”, pointing out that the expected impact of the decision is to provide a higher level of investor oversight on the companies’ boards of directors, improving companies ’performance, and the quality of corporate boards’ performance.
He continued: «With regard to the third procedure, the authority issued a decision to monitor the quality of auditors’ business of public joint-stock companies, with the aim of strengthening control of the quality of auditors ’business of public joint-stock companies, and improving the quality of financial data», indicating that the expected impact is to rationalize the decisions of investors and users of financial data, and to stimulate Companies to improve their financial performance.
Regarding the fourth procedure, the Minister said: “The Authority adopted its new organizational structure from the distinguished Cabinet in the beginning of 2018, and included the creation of new departments concerned with periodic inspection and oversight of listed public shareholding companies, and financial investigation in the event of violations, with the aim of strengthening the supervisory and supervisory role of the Authority Public shareholding companies, and the expected impact is to improve the performance of companies and reduce the number of violations, and support the company’s boards of directors to address weaknesses in companies, and develop corrective plans ».
In the draft articles referred by the committees, the Federal National Council approved two federal bills, the first on amending some provisions of Federal Law No. (18) for the year 1981 regarding the organization of commercial agencies, and the second on organizing the strategic stock of food commodities in the state, after amending and introducing A number of their articles and clauses, in a way that reflects the Council's keenness to contribute to the development of the country's legislative system in many key sectors supporting the balanced comprehensive development process.
The draft law in regulating the strategic stockpile of food commodities in the state has increased the penalties, so that the application of the penalties stipulated in this law does not prejudice any more severe punishment stipulated in any other law, and it is punishable by imprisonment or by a fine of at least 100,000 dirhams and not more than Five million, or both, are in breach of its provisions.
The Council also approved a draft law amending some provisions of Federal Law No. (18) of 1981 regarding the regulation of commercial agencies, the second article of which stipulates that conducting the business of commercial agencies in the state is limited to citizens, individuals or companies that are fully owned by those who come A natural natural person, a public legal person, a private legal person owned by public moral persons, and a private legal person who has full ownership of natural natural citizens, and is excluded from the provisions of Clause (1) of this second article: public joint-stock companies established in the state, which have no less than a share of Citizens of the state have 51% of them Company money.
The bill, on regulating the strategic stockpile of food commodities, toughens sanctions.
Requiring the boards of directors of joint-stock companies whose losses are more than 50%, to call the general assembly within 30 days from the date of disclosure.
"Securities and commodities" have taken measures to ensure that investors are preserved and the troubled companies recover.