All UAE-listed firms to handle investor relations

Chris Hamblin

Clearview Publishing

24 March 2014

The board of directors of the Securities and Commodities Authority of the United Arab Emirates has met in Dubai and decided to compel every company listed on UAE securities markets to have an investor relations department. The board's chairman, Sultan bin Saeed Al-Mansoori, the minister of economy, said the new service has now become vital to the market in its bid to achieve 'advanced market status'. This is not a technical term and might be related to MSCI (Morgan Stanley Capital International), the industry standard for measuring foreign market performance. The assessors have been reviewing South Korea and Taiwan for a couple of years for a potential move to 'developed' status. For countries that wish to move up from 'emerging' to 'developed', there are three criteria:

* income levels 25% higher than $12,276 (the World Bank high income threshold) for three consecutive years;

* stock exchanges with at least five companies with market capitalisations of roughly $1.8 billion each and a 'significant' amount of trading volume; and

* stable, efficient and, above all, accessible markets, with the country open to foreign ownership, allowing the free movement of capital.

The SCA has set up a task force of experts consisting of two of its own people, two from the Abu Dhabi Stock Exchange and two from the Dubai Financial Market. Their job will be to study several proposals the SCA has already received about this, calling on the expertise of international professional 'investor relations practitioners' and conducting in-depth studies on the subject. The board also conducted a cursory survey of companies listed on advanced markets and found that they typically had investor relations departments or something similar. These compared favourably to companies with no investor relations service facilities, which they also studied.

If the decision comes to fruition, the following rules will operate.

* Each listed company will have to appoint a named person to handle enquiries from investors and communicate with them, although this need not be his sole job.

* Each listed company must have a website which contains all the necessary information about the company and its management.

* The website must have a section reserved for investor relations containing “all information of interest to investors about the company.”

* The website must also have an agenda that displays the “dates of relevant information about the company, like its general assembly meetings, disclosures, etc.”