Selecting a GCC Stock Exchange2

Selecting a GCC Stock Exchange

A Brief Overview of Listing Rules for Middle Eastern Stock Exchanges

A Brief Overview of Listing Rules for Middle Eastern Stock Exchanges The information contained in this document is published by Latham & Watkins as a service to its clients and should not be construed as legal advice. Should further analysis or explanation of the subject matter of this document be required, please contact any of the Latham & Watkins authors listed below or the Latham & Watkins attorney with whom you normally consult. Dubai Doha Bryant Edwards Telephone: +971 4 704 6323 Email: [email protected]

Andrew Tarbuck Telephone: +971 4 704 6300 Email: [email protected]

Craig Stoehr Telephone: +974 452 8321 Email: [email protected]

Kai Schneider Telephone: +971 4 704 6337 Email: [email protected]

Omar Nazif Telephone: +971 4 704 6300 Email: [email protected]

London Olof Clausson Telephone: +44 (0) 20 7710 1056 Email: [email protected]

Scott Colwell Telephone: +44 (0) 20 7710 1801 Email: [email protected]

Stacy López Telephone: +44 (0) 20 7710 1054 Email: [email protected]

Dipti Thakar Telephone: +44 (0) 20 7710 1829 Email: [email protected]

Latham & Watkins is pleased to acknowledge the significant contributions of the following law firms that assisted with the production of this Overview. With respect to the Muscat Securities Market: Said Al-Shahry Law Office Sultanate of Oman Telephone: +968 2460 3123 Website: www.saslo.com

With respect to the Saudi Stock Market: Law Office of Dr. Mujahid M. Al-Sawwaf Saudi Arabia Telephone: +966 2 669 0751 Email: [email protected]

With respect to the Kuwait Stock Exchange: Al-Sarraf & Al-Ruwayeh (In Association with Stephenson Harwood) Kuwait Telephone: +965 2 240 0061/2/3 Website: www.asarlegal.com

With respect to the Bahrain Stock Exchange: Qays H. Zu'bi Attorneys & Legal Consultants Bahrain Telephone: + 973 17 538 600 Website: www.qayszubilaw.com

20 November 2008 ________________________________________________________________________________________________________________

Latham & Watkins LLP is a limited liability partnership organised under the laws of the State of Delaware, United States. Latham & Watkins LLP is registered with the Dubai Financial Services Authority and operates in the Dubai International Financial Centre as a recognized limited liability partnership.

TABLE OF CONTENTS

Page

I. Introduction ...................................................................................................................................................1

II. The Framework: Which Disclosure Rules are Relevant for your IPO?..................................................1

A. The Legal Framework for Offerings under Rule 144A and Regulation S ........................................2 B. International Disclosure Practices.....................................................................................................3

Listing Rules for Middle Eastern Stock Exchanges..................................................................................................6

III. Dubai International Financial Exchange ....................................................................................................6

A. Listing Application and Ongoing Requirements...............................................................................6 B. Corporate Governance Requirements ...............................................................................................9 C. Recent Developments .....................................................................................................................10

IV. Dubai Financial Market and Abu Dhabi Securities Exchange................................................................10

A. Listing Application and Ongoing Requirements.............................................................................10 B. Corporate Governance Requirements .............................................................................................14

V. Doha Securities Market ..............................................................................................................................15

A. Listing Application and Ongoing Requirements.............................................................................15 B. Recent Developments .....................................................................................................................17

VI. Saudi Stock Market.....................................................................................................................................18

A. Listing Application and Ongoing Requirements.............................................................................18 B. Corporate Governance Requirements .............................................................................................20

VII. Muscat Securities Market...........................................................................................................................20

A. Listing Application and Ongoing Requirements.............................................................................20

VIII. Bahrain Stock Exchange.............................................................................................................................22

A. Listing Application and Ongoing Requirements.............................................................................22 B. Recent Developments .....................................................................................................................26

IX. Kuwait Stock Exchange ..............................................................................................................................26

A. Listing Application and Ongoing Requirements.............................................................................27 B. Transparency and Disclosure ..........................................................................................................30 C. Recent Developments .....................................................................................................................30

ENDNOTES ...............................................................................................................................................................31


1

I. INTRODUCTION

Despite a worldwide recessionary trend that has reduced the price of oil by more than half since its peak in July 2008, Gulf Cooperation Council (“GCC”) member countries continue to experience unprecedented financial liquidity as oil prices still remain well above historical averages. Regional GDP growth reached 15.6 percent in 2006, the highest since 1982.1 Notwithstanding the difficult state of the world economy, Merrill Lynch estimates regional GDP growth for 2009 of 4.5 percent.2

In recent years, a number of GCC member countries—the Kingdom of Saudi Arabia, the United Arab Emirates (“UAE”) and the Sultanate of Oman—have enjoyed explosive growth in the number of initial public offerings (“IPOs”) listed on their respective stock exchanges.3 Whereas only 67 companies went public on GCC exchanges between 1995 and 2006, an estimated 116 will do so between 2007 and 2010.4 Despite an international tightening in liquidity prompted by the global credit crunch, strong economic growth in the Middle East nearly doubled the IPO value in the GCC countries for the first nine months of 2008, from approximately US$5.9 billion to approximately US$11.7 billion.5

Regional IPOs have grown not only in number, but in size as well, increasing from an average of US$45 million between 1995 and 2003 to over US$400 million today.6 In November 2007, DP World’s US$4.96 billion flotation on the Dubai International Financial Exchange (“DIFX”) became the largest ever Middle East IPO,7 surpassing the previous record of US$4 billion set by Saudi Telecom in 2003.8

The establishment of the DIFX in 2005 was a watershed moment for Middle Eastern equity markets. Aimed at becoming the leading exchange between Europe and Asia, the DIFX has adopted listing and maintenance requirements comparable to other leading international exchanges.9 Notably, computerized share registries now allow trading in the same pool of shares on multiple exchanges, enabling foreign companies to raise their profile with GCC investors by dual listing on both the DIFX and another exchange.10 The ability to dual list helped the DIFX more than double its listings in 2007, from 22 to 56.11

Each of the GCC markets is expanding to satisfy increasingly sophisticated investor demands. For example, the Abu Dhabi Securities Exchange (“ADX”) is expected to launch trading in exchange-traded funds (“ETFs”) in 2009 and the DIFX is due to launch its “Market of Markets” in November 2008, which allows the DIFX to introduce new asset classes for listings, including real estate investment trusts, ETFs and structured products, together with more streamlined listing procedures for equities, Shari’a-compliant securities (including sukuks) and debt securities.

In this Client Alert we provide an overview of the principal disclosure obligations facing a company contemplating an IPO in the Middle East, and we summarise the key listing and maintenance requirements for each of the eight GCC stock exchanges—the DIFX, the Dubai Financial Market (“DFM”), the ADX, the Doha Securities Market (“DSM”), the Saudi Stock Market (“Tadawul”), the Muscat Securities Market (“MSM”), the Bahrain Stock Exchange (“BSE”) and the Kuwait Stock Exchange (“KSE”).

II. THE FRAMEWORK: WHICH DISCLOSURE RULES ARE RELEVANT FOR YOUR IPO?

A number of factors dictate what disclosure will be included in a prospectus or other offering document used to market an IPO of a company. The listing rules of the stock exchange (or stock exchanges in the event of a dual listing) on which the company’s shares will be listed should be the initial starting point, as these rules set out, in varying levels of detail, the disclosure required to be included in a prospectus in order to list the shares on that stock exchange. Other factors affecting the decision of what disclosure to include in the prospectus include:

o the expected distribution (i.e., marketing and sales) of the shares, including whether a retail offering will be made in the country of listing or elsewhere, whether shares are offered also outside the country of listing and, if so, in which countries the shares will be offered and sold (in particular, whether the offering will include US institutional and/or retail investors);

o the internal standards of process and disclosure of the underwriters of the offering;

o the industry sector of the business of the company, which may require or benefit from technical or specialist reports such as mining, oil and gas or specific areas of research and development. The decision to include such reports is based on the principle that there should be sufficient information in an offering document to enable an investor to make an informed assessment of the


2

company, which may be a statutory or regulatory requirement but may also be a commercial consideration to disclose sufficient information for the company to “tell its story”;

o the type of transaction and deal size; and

o local and international market practice.

The most important of the factors discussed above is the expected distribution of the shares. As is often the case, an issuer may decide to access the international capital markets, rather than raising funds in the local market, to ensure sufficient demand for a large offering, to access a broader institutional investor base and to access markets and investors specialising in the issuer’s business sector. If a company ultimately decides on an international offering, it would engage, often in conjunction with one or more local investment banks, international investment banks with expertise in international offerings to advise them on the IPO process, including in which jurisdictions to market the offering in order to obtain the most demand for the shares offered and how best to achieve optimal execution of the IPO.

The securities laws and regulations in each country into which the IPO will be marketed set out to whom, and under what circumstances, securities may be offered to its citizens, residents and legal entities, including, for public offerings of securities, detailed disclosure requirements regarding the issuer and the securities being offered. In addition, such laws or regulations will very often provide for so called “private placement” exemptions that permit companies to sell securities in the country without being required to comply with the more onerous disclosure obligations of a public offering. These private placement exemptions often relate to small offerings (limited to a specified number of offerees or purchasers and/or limited to a specified value of the securities) and offerings limited to sophisticated investors. The scope and availability of these exemptions vary in each jurisdiction.

A. The Legal Framework for Offerings under Rule 144A and Regulation S

In the United States, all offers and sales of securities must be registered with the Securities and Exchange Commission (the “SEC”) unless the transaction is exempt from such registration or, alternatively, not subject to registration. The SEC registration process is cumbersome and time consuming. In recent years, most IPOs by non-US companies which tap US investor interest do so in reliance on an exemption from the registration requirements referred to as Rule 144A. Rule 144A under the US Securities Act of 1933, as amended (the “US Securities Act”) permits the resale into the United States of securities in an underwritten offering to certain “qualified institutional buyers” or “QIBs”, which generally are institutional investors that own or invest on a discretionary basis at least US$100 million in securities.12

A Rule 144A offering is typically accompanied by a concurrent offering outside the United States conducted in compliance with Regulation S under the US Securities Act. Regulation S permits the distribution and resale of securities to persons outside of the United States, subject to certain conditions, including that offers and sales of such securities must be made in an “offshore transaction”.13

A combined Rule 144A and Regulation S offering is advantageous to a company in the Middle East considering an international IPO (including in the United States) for many reasons. Firstly, the company will not be bound by the stringent disclosure requirements of a US registered offering. Secondly, the company would not be bound by the on-going reporting requirements of the US securities laws, although, depending on the ultimate number of US holders of its securities, the company may be required to furnish to the SEC, or publish on its website or through an electronic delivery system, English-language copies of certain information that it makes or is required to make public in its home jurisdiction, files or is required to file with any stock exchange or distributes or is required to distribute to holders of its securities. Finally, compliance with Rule 144A and Regulation S would alleviate the time-consuming process involved in an SEC-registered offering.

Although offerings under Rule 144A and Regulation S are exempt from SEC registration, such offerings remain subject to the anti-fraud provisions of the US securities laws, principally Rule 10b-5 under the US Securities Exchange Act of 1934, as amended (the “US Exchange Act”), which is discussed in more detail below. As a result, an issuer is still required to disclose a significant amount of information to prospective investors in the IPO and may be subject to liability in the United States for material misstatements and omissions in such information.14 The disclosure of this information will principally be in the form of an offering memorandum or offering circular.


3

B. International Disclosure Practices

In addition to the disclosure requirements of the stock exchange on which the company’s shares are to be listed, the disclosure requirements and market practice for international offerings under Rule 144A and Regulation S are generally based on the disclosure standards required in an SEC-registered offering. At times, additional guidance is sought from other legal sources (such as the Prospectus Directive of the European Union (“EU”)) for a “best practice” view. It is important to note, however, that the SEC disclosure requirements serve as guidance only. They do not formally apply to offerings made in reliance on Rule 144A and Regulation S.

In a Rule 144A and Regulation S offering, disclosure must also be viewed against the general antifraud rules of the US federal securities laws, in particular, Rule 10b-5. This rule prohibits, in connection with any purchase or sale of a security, the making of “any untrue statement of material fact” or omitting “to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading”.15 An issuer or seller of securities, as well as any underwriter, may face liability under Rule 10b-5 for material misstatements or omissions made in connection with the sale of securities in an offering. Potential civil and criminal penalties for violations of Rule 10b-5 include payment of damages, rescission, imprisonment, fines or disgorgement orders.16 Because Rule 10b-5 applies also to sales of securities that are not registered with the SEC, including sales of securities made in compliance with Rule 144A and Regulation S, an issuer and underwriter of securities should always be mindful of whether the disclosure in the offering memorandum is sufficient to meet the Rule 10b-5 standard.

Although not specifically applicable to non-SEC registered offerings, guidance on what constitutes adequate disclosure in a Rule 144A and Regulation S offering is typically taken from the requirements set forth in Form F-1 under the US Securities Act and Form 20-F under the US Exchange Act (which are SEC forms used to register offerings in the United States by non-US issuers). Form F-1 is the form required to be used to register offerings by first-time non-US issuers and requires the most extensive disclosure for foreign issuers. Form 20-F is an integrated SEC form for non-US issuers which is used both as a registration statement for registering the securities and as an annual report for such issuers that are subject to the ongoing reporting requirements of the US Exchange Act.

The following sets out certain key disclosure requirements contained in Form F-1 and Form 20-F.

FORMS F-1/20-F

Summary • Summary of the prospectus written in “plain English” (i.e., limited use of defined terms, clear

presentation and limited use of legal and financial jargon)17

Risk Factors • Discussion of the most significant factors that make the offering speculative or risky,18 including,

among others, risks associated with the issuer, the issuer’s industry and the offering19

Issuer • Description of the issuer’s business operations, the products it makes or the services it provides and the

factors that affect the business20 • Description should include information about the issuer’s history and development, business overview,

organizational structure, property, plant and equipment and industry specific information21

Operating and Financial Review and Prospects • Explanation from management of the factors that have affected the issuer’s financial condition and

results of operations for the periods covered by the financial statements set forth below, and management’s assessment of factors and trends which are anticipated to have a material effect on the issuer’s financial condition and results of operations in future periods22

• Description should include information regarding operating results, liquidity and capital resources, research and development, patents and licences, trend information, off-balance sheet arrangements and future contractual obligations23

Financial Information • Consolidated financial statements for the three most recent financial years, audited by an independent

auditor and accompanied by an audit report24


4

• Condensed consolidated interim financial statements for the current year, if the prospectus is dated more than nine months after the end of the last audited financial year, with comparative financial statements for the same period in the prior year25

• Selected historical financial data (generally five most recent financial years are required)26 • Capitalisation and indebtedness table as of a date no earlier than 60 days prior to the date of the

prospectus27 • Pro forma information in the event of certain significant transactions (including significant

acquisitions, dispositions and business combinations)28 since the date of the last audited financial statements, including condensed pro forma balance sheet and condensed pro forma income statement.29 Additional pro forma information is permissible if the information is required by a non-US regulator.30

Directors, Senior Management, Employees and Advisors • Description of the issuer’s directors and managers, including their experience, qualifications and levels

of compensation, as well as information concerning key and other employees and information on advisors involved in the offering31

Major Shareholders and Related Party Transactions • Description of major shareholders and other persons that control or may control the issuer32 • Description of transactions the issuer has entered into with persons affiliated with the issuer and

whether the terms of such transactions are fair to the issuer33

The Offer and Listing • Indication of whether the securities are to be issued in registered or bearer form, description of the

number of offered securities to be issued, the minimum offer price, the arrangements for transfer and any restrictions on the free transferability of the offered securities34

• Description of any limitation or qualifications of the rights of holders of the offered securities35 • Description of all stock exchanges and other regulated markets on which the securities to be offered or

listed are traded and any applications for future listing36 • Dates on which the shares will be listed37

Other • Description of additional information including, among other things, the share capital of the issuer, its

memorandum and articles of association, material contracts, exchange controls and taxation to which shareholders in the host country may be subject38

• Quantitative analysis and qualitative disclosure about market risk, including, among other things, risks related to fluctuations in interest rates and foreign exchange rates39

• Description of any further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading40

Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 (the “Prospectus Directive”) and the subsequent implementation thereof in the member states (“Member States”) of the EU provides an additional source of disclosure requirements to reference in international offerings. The Prospectus Directive sets out the initial disclosure requirements for issues of securities that are offered to the public or admitted to trading on a regulated market in the EU. The Prospectus Directive regulates and standardises prospectus contents in all Member States so that the process of raising capital for issuers is facilitated and investors are protected by the requirement of certain levels of disclosure standards. It generally requires that a prospectus must contain all the information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the issuer and the rights attaching to the securities.41 The Prospectus Directive also provides that a prospectus should be presented in a form which is comprehensible and easy to analyse and be prepared having regard to the particular nature of the securities and the issuer.42


5

The following sets out some of the key disclosure requirements.

PROSPECTUS DIRECTIVE

Issuer • Detailed business description of the issuer’s group and management, its objects and purposes and

description of markets, including breakdown of revenues by main activities and geographic markets43 • Description of the issuer’s current principal investments and principal investments in the preceding

three years or future principal investments to which the issuer has committed (including method of financing)44

• Summary of material contracts entered into by the issuer or a group member in the previous two years outside the ordinary course of business containing provisions that are material to the group45

• Details of related party transactions46

Risk Factors • Description of risk factors relating to the issuer’s ability to fulfil its obligations under the securities and

factors material to the securities to make an assessment of the market risk associated with them47

Financial Information • Three years’ accounts; at least two years’ accounts may be required in accordance with International

Financial Reporting Standards (“IFRS”)48 • Unaudited interim financial statements if the prospectus is dated more than nine months after the end of

the last audited financial year. A summary of selected financial information for the relevant financial periods49

• Operating and financial review or “MD&A” section50 • Profit forecasts and information on anything that is likely to have a material effect on the issuer’s

prospects, must be accompanied by an auditor’s report51 • Issuer’s capital resources and cash flow, including a working capital statement52 • Description of significant changes in respect of financial or trading position of the group since the last

financial statements53 • Significant recent trends in production, sales and inventory and costs and selling prices, since last

financial year54 • Information on known trends, uncertainties, demands, commitments and events that are reasonably

likely to have a material effect on the issuer’s prospectus for the current financial year55 • Statement of indebtedness and capitalisation no older than 90 days prior to the date of approval of the

prospectus56 • Pro forma financial information in the event of certain significant transactions57

Shareholders and Management • Detailed disclosure regarding members of administration, management and supervisory bodies58 • Detailed information relating to the issuer’s share capital59 • Information concerning whether the issuer is directly or indirectly owned by another entity or is

dependent upon entities within its group, and an explanation of any such dependence and disclosure of any arrangements that might later result in a change of control. Description of any direct or indirect “control”, including measures in place to ensure control is not abused60

• If known, the extent to which major shareholders or members of management intend to subscribe for the offer or whether any person intends to subscribe for more than 5 percent of the offer61

Other • Description of any interest, including conflicting ones, that is material to the offering, detailing the

persons involved and the nature of the interest62 • Description of the use of proceeds from the offering63


6

Listing Rules for Middle Eastern Stock Exchanges

III. DUBAI INTERNATIONAL FINANCIAL EXCHANGE

The initial listing and maintenance requirements for the DIFX are set forth below. The regions of origin for both primary and secondary equity securities offerings include the Middle East, North Africa, Turkey, South Africa, India and Asia. The Dubai Financial Services Authority (“DFSA”) regulates the Dubai International Financial Centre (“DIFC”), including the DIFX.64 Although the DIFC is situated in the Emirate of Dubai, it is subject to its own laws and regulations and has its own courts and arbitration centre. The DFSA delegates much of the listing and oversight process to the DIFX, but it retains authority to issue regulations and intervene in affairs affecting the DIFX.65 The DIFX publishes listing rules governing listing on the DIFX and ongoing maintenance requirements for issuers, which it may waive in certain circumstances.66

A. Listing Application and Ongoing Requirements

1. Initial Application to List

The issuer must apply to the DIFX to be listed. An application may be denied if the DIFX determines that the listing could be detrimental to the DIFX’s orderly operation or reputation or that the issuer or its business are not suitable for listing.67 The DIFX will normally deliver a final decision within 12 business days of receiving a complete and acceptable application.68 Generally, to be eligible for listing by the DIFX, the issuer must meet the following conditions and eligibility criteria:

a. Minimum Distribution and Market Value Criteria

o Minimum Distribution Requirements: To satisfy the DIFX of an eventual “adequate and open” market in the issuer’s shares, there generally must be a minimum free float of 25 percent of the shares to be listed (i.e., shares not held by connected persons to the issuer).69 Liquidity is a key concern for the DIFX but it will take into account the number of shareholders and number of securities constituting the free float, the value of the free float and the appointment of market makers.

o Market Value of Publicly Held Shares: The issuer’s expected market capitalization must be at least US$50 million.70

b. Listing Requirements

o The issuer must be in compliance with the laws and requirements of any securities regulator by which it is regulated, the jurisdiction in which it is incorporated and any stock exchange on which it is listed.71 The issuer must not be subject to any legal or regulatory restrictions that prevent the listing.72

o The directors must have appropriate experience in the issuer’s business and exhibit high standards of integrity.73

o The issuer must have published audited accounts produced in accordance with IFRS or other standards acceptable to the DIFX for at least three years, ending not more than six months prior to the date of the application.74

o The issuer’s constitution must contain all provisions mandated by the DIFX.75

o During the application process, the issuer must take all reasonable care to ensure that any statement, document or other information provided to the DIFX is not misleading, false, deceptive or subject to material omissions.76 The issuer must also expressly disclaim the DIFX of any responsibility for the contents of its listing documents on the front cover of the issuer’s prospectus.77


7

o The issuer may be required to appoint a sponsor to communicate with the DIFX on behalf of the issuer during the review process, provide guidance to the issuer on the listing rules and assist in the application process.78 A sponsor is required by the DFSA when there is a prospectus offer by an issuer in the DIFC and is required by the DIFX when there is an application for listing on the DIFX other than on a secondary listing basis.79

o The issuer must pay the required admission fee to the DIFX.80

o The issuer of shares held out as Shari’a-compliant must appoint a Shari’a Supervisory Board that meets the DFSA’s and the DIFX’s requirements.81

c. Securities Eligibility Criteria

o The DIFX must approve any restrictions on transferability.82

o The entire class of shares to which the listed shares belong must be listed and all the shares in that class must carry the same rights.83

o Shareholders must have the right to record and register changes in ownership, specified rights to share in profits and the ability to vote in person or by proxy, with no distinction in voting weight between the two voting methods.84

d. DFSA Oversight of Listing Process

o The DFSA may object to the listing of securities on the DIFX where the listing would be detrimental to the interests of market participants or in case of non-compliance with DIFX rules, DFSA rules or securities rules of another relevant jurisdiction.85 The DIFX will not admit securities to which the DFSA has objected.86 Alternatively, the DFSA may impose restrictions on admission to the DIFX.87 However, the DFSA expects to exercise these powers rarely.88

e. Application Documents

o The application for listing submitted to the DIFC must be accompanied by a listing document, which, in the case of an offer in the DIFC, may be a prospectus or an exempt offer statement that complies with the DFSA’s Offered Securities Rules.89

2. Secondary Listings

In order to list shares on the DIFX on the basis of a secondary listing, the issuer must have a primary listing on an exchange recognized by the DIFX, which generally includes any member or affiliate of the World Federation of Exchanges (although non-affiliated exchanges will be considered on a case-by-case basis).90 Note that currently this excludes the AIM market operated by the London Stock Exchange. The secondary issuer must generally comply with the eligibility criteria and ongoing obligations applicable to a primary issuer, with certain modifications or waivers.91 The DIFX reserves absolute discretion to cancel or refuse to grant a secondary listing.92

3. Continuing Obligations

After a listing application is approved, the issuer is subject to the following continuing obligations:

a. Ongoing Contact

o Every issuer must appoint an ongoing contact to facilitate communications with the DIFX. The issuer will normally be required to appoint the sponsor


8

as the ongoing contact but, if not, then two authorised representatives, being directors or senior management of the issuer, must be appointed to act as the ongoing contact. The ongoing contact must respond promptly to inquiries from the DIFX and be available before the DIFX opens each day.93

o The ongoing contact must assist the issuer in complying with its continuing obligations, ensure that the issuer receives fair and impartial guidance regarding compliance, notify the issuer of any non-compliance and, if the issuer does not comply, notify the DIFX of non-compliance.94

o The issuer must notify the DIFX in writing of any changes to its ongoing contact.95

b. Continuing Eligibility

o The issuer must continue to comply with the conditions and eligibility criteria for listing described above.96

c. Securities Maintenance Obligations

o The issuer must apply to the DIFX and obtain approval for the listing of any securities of the same class as the securities already listed by the issuer, provide for two-way voting on proxy forms, comply with certain requirements relating to registration and transfers of share ownership, compile all marketing materials for its securities in a file which will be subject to review by the DIFX, respond promptly to DIFX inquiries concerning unusual trading in its shares, pay the annual listing fee, maintain sufficient operations or asset values to maintain the DIFX listing and comply with any other continuing obligations imposed by the DIFX.97

o An issuer of shares held out as Shari’a-compliant must provide for periodic review by a Shari’a Supervisory Board for confirmation of compliance and disclose any changes to the composition of the Shari’a Supervisory Board.98

d. Disclosures

o The issuer must make disclosure to the market without delay of price-sensitive information relating to the issuer, being information which would be liable to lead to a substantial movement in the price of the issuer’s securities.99 The issuer must take all reasonable care to ensure that all disclosure is complete, true, plain and not misleading.100

o Disclosure to the DIFX or the public is required for any closure of the issuer’s register, meeting of security holders, proposed action affecting rights of existing holders, repurchase of listed securities by the issuer, material change to the business of the issuer or failure or belief of failure to continue to meet eligibility criteria.101

o The issuer must consult with the DIFX in advance about any required disclosure for any proposed change to the constitution, board of directors, domicile of incorporation, rights attaching to any listed class of securities or classes into which listed securities are convertible, ongoing contact, secretary, auditors, registered address, transfer agent or registrar.102 In practice, the DIFX will not participate in consultation and a simple notification will be sufficient.

o For secondary listings, the DIFX must be simultaneously provided with any information or document that is provided to the primary regulator.103 The issuer must publicly disclose any suspension from listing or delisting of its securities by another exchange.104


9

4. Ongoing Filings

o The issuer must file with the DFSA an annual report105 accompanied by an auditor’s report106 and semi-annual financial statements and other required statements.107

o Upon the appointment of any new director or secretary, the issuer must file an undertaking signed by the new director or secretary.108

B. Corporate Governance Requirements

In addition to the listing and maintenance requirements detailed above, an issuer must meet certain corporate governance standards for initial listing and ongoing maintenance of a listing. The DFSA promulgates the corporate governance rules, which are set out in the DFSA’s Offered Securities Rules, although both the DFSA and the DIFX monitor compliance. The DFSA may order the DIFX to de-list or suspend securities, subject to notice and explanation requirements.109

1. Shareholder Consent Requirements

o Majority shareholder consent is required for the issuer to take certain enumerated actions, including alterations of the issuer’s constitutional documents, alterations to the issuer’s share capital, certain acquisitions of assets, certain related party transactions, appointments or removals of directors and removals of the auditor.110 Approval is required from the majority of the class altered as well as any negatively affected class for any alteration to the rights of a class of securities.111

o Any allotment, sale or cancellation of treasury shares requires majority shareholder approval.112

o The issuer must provide each shareholder the right and means to vote by proxy for each meeting in which shareholders may exercise their voting rights.113

2. Corporate Governance Principles

o The issuer must comply with the DFSA corporate governance rules and principles and include a statement in the annual report explaining its application of the corporate governance rules.114

o The issuer must have a clear division of responsibilities among and between officers and directors, with directorial accountability; the issuer may not oppress minority shareholders; the directors must issue true, balanced and understandable assessments of the entity and prospects when issuing statements; and the directors must develop formal arrangements for following these principles and interacting with auditors.115

o Directors must act on a fully informed basis, in good faith, honestly, with due diligence and care and in the best interests of the issuer and shareholders.116

o An issuer must appoint an audit committee and should consider, depending on the size and nature of its operations, appointing remuneration and nomination committees.117

o At least one-third of the board of directors must comprise non-executive directors of which at least two non-executive directors must be independent.118


10

C. Recent Developments

1. Proposed Changes to the DIFX Listing Rules

The DIFX’s Listing Rules are currently subject to a major review and market participants have been asked to comment on the proposed new listing rules which will most likely come into force in early 2009.119

Key proposed changes include:

o specific eligibility criteria for equity securities, Shari’a-compliant securities, structured securities, fund securities and debt securities;

o a regime for issuers without a three-year trading history;

o mandatory lock-ins for certain shareholders;

o mandatory minimum number of shareholders;

o mandatory appointment of two market makers for a primary equity listing; and

o a new “Lead Manager” regime with increased responsibilities of the Lead Manager, including undertaking due diligence on the applicant and being responsible for information set out in the offering document.120

IV. DUBAI FINANCIAL MARKET AND ABU DHABI SECURITIES EXCHANGE

The initial listing and maintenance requirements for the DFM and ADX are set forth below. The DFM and ADX are both regulated and supervised by the Emirates Securities & Commodities Authority (“ESCA”).121 The ESCA administers a set of listing regulations that apply to issuers listed on the DFM or the ADX.122 Each of the DFM and the ADX also maintains an additional set of listing and maintenance requirements.123


An issuer must file an application for listing with the ESCA and obtain authorisation for listing from the ESCA prior to listing on the DFM or the ADX.124 Upon submission of the completed application to the ESCA, an ESCA committee will examine the application and make a decision on it within 15 days of its submission.125 The committee will refer its decision to the ESCA board, which will make the final determination on the application within 30 days of the referral.126 After obtaining ESCA approval, the issuer must also apply to the market on which it will list, either the DFM or the ADX.127 Both the DFM and the ADX reserve the right to accept or reject the application regardless of the ESCA’s decision.128

1. Listing Requirements for UAE Issuers

The ESCA operates a dual-category scheme for issuers incorporated in the UAE that apply to list.129 Issuers that have satisfied all of the ESCA requirements described below are assigned to the first category.130 Issuers that have failed to satisfy one of the ESCA requirements described below or some other rule of the ESCA, such as the disclosure or transparency rules, are assigned to the second category.131 The ESCA may move issuers between the categories as they either satisfy or cease to comply with the relevant requirements.132 The issuer’s category must accompany the issuer’s company name in documents relating to the issuer.133

a. Market Value Criteria

o The issuer’s paid-up capital may not be less than the greater of AED 25 million or 35 percent of the subscribed capital.134

o At the time of the application, the shareholders’ equity in the issuer may not be less than the paid-up capital.135


11


o The issuer must be registered with the Ministry of Economy & Commerce.136

o The issuer must have incorporated at least two years prior to the application, issued audited annual financial statements each year and held its ordinary general assembly at least once a year.137

o The issuer must comply with any additional listing requirements imposed by the ESCA and must pay the required listing fee.138


o Shareholders must hold equivalent rights within each class of shares issued.139

d. Additional DFM Requirements

o In addition to the ESCA requirements, an issuer seeking to list on the DFM must comply with any additional requirements imposed by the DFM.140 The DFM reserves the discretionary authority to waive certain listing requirements, to waive certain document requirements and to decline an application without explanation.141

e. Additional ADX Requirements

o In addition to the ESCA requirements, an issuer seeking to list on the ADX must comply with any additional requirements imposed by the ADX.142 The ADX may require that the issuer obtain the ADX’s approval of the issuer’s articles of association, transfer its register of shareholders to the ADX, grant the ADX a power of attorney for the purpose of signing share certificates and appoint a person to monitor the issuer’s register of shares.143

f. Obligations Following Approval

o At least 10 days prior to being listed on the relevant market, the issuer must publish its annual and interim financial statements and a summary of the board of director’s report submitted with its application for listing in two Arabic-language daily newspapers in the UAE and, if non-UAE nationals will be permitted to trade in its shares, one English-language daily newspaper.144

2. Listings of Foreign Companies

As with domestic listings, a foreign issuer must first obtain ESCA approval to list and then obtain the approval of the market on which it will list, either the DFM or the ADX. Generally, to be eligible for listing, a foreign issuer must meet the following conditions and eligibility criteria:


o The issuer’s capital must be at least AED 40 million, or its equivalent, and the issuer must have at least 100 registered shareholders.145


o The issuer must be a public joint stock company, be in compliance with the laws of its country of incorporation and be listed on the market of its country of incorporation under the supervision of a regulatory body similar to the ESCA.146


12

o The issuer must have incorporated at least two years prior to the application, issued audited annual financial statements each year and held its ordinary general assembly at least once a year.147

o The issuer is required to appoint a representative in the UAE to handle share registration, distribution of dividends and submission of required reports to regulatory authorities.148 The representative can be a securities market licensed in the UAE, a bank operating in the UAE and licensed by the Central Bank or a company operating in the securities industry.149

o For the two years preceding the application to list, the issuer must have had net assets of at least 20 percent of paid-up capital or net profits distributable to shareholders averaging at least 5 percent of paid-up capital.150

o The issuer must have published a summary of the board of director’s report to be submitted with its application for listing in two Arabic-language daily newspapers in the UAE and must submit an undertaking to publish its annual and interim financial statements before its shares are permitted to be traded in the market.151

o The issuer must comply with any additional listing requirements imposed by the ESCA and must pay the required listing fee.152 The ESCA may, in certain cases, exempt foreign companies from any of the listing requirements applicable to them.153


o Neither the issuer nor its country of incorporation may absolutely prohibit share transfers between non-nationals and any limited restrictions on such transfers must be disclosed.154

d. Additional DFM Requirements

o In addition to the ESCA listing requirements, the DFM requires that a foreign issuer applying to list on the DFM enjoy a sound financial position, comply with US generally accepted accounting principles or international accounting standards (“IAS”), present its financial statements in both US dollars and its local currency and provide a pre-listing informational memorandum in both English and Arabic that is sufficient to allow investors to make an informed assessment of the issuer and its securities.155

o The issuer also must comply with any additional requirements imposed by the DFM.156 The DFM reserves the discretionary authority to waive certain listing requirements, to waive certain document requirements and to decline an application without explanation.157

e. Additional ADX Requirements

o In addition to the ESCA requirements, an issuer seeking to list on the ADX must comply with any additional requirements imposed by the ADX.158 The ADX may require that the issuer obtain the ADX’s approval of the issuer’s articles of association, transfer its register of shareholders to the ADX, grant the ADX a power of attorney for the purpose of signing share certificates and appoint a person to monitor the issuer’s register of shares.159


Once the issuer’s shares are listed on the DFM or the ADX, the issuer must comply with the following continuing obligations of the ESCA and the market on which it is listed:


13

a. ESCA Obligations

o The issuer must continue to comply with the listing requirements described above.160 The issuer must comply with all regulations of the ESCA and the market on which it is listed, provide any information requested by the ESCA or the market on which it is listed and pay the required annual fees.161

o The issuer must disclose and notify the ESCA and the market on which it is listed of any material information that may affect the price of its shares.162 If requested to do so, the issuer is required to publish any explanatory information relating to it that is necessary to ensure the integrity of trading in its shares and investor confidence.163 If a change occurs to a significant matter discussed in a press announcement, the issuer is required to issue a new announcement reflecting the changed situation.164 The issuer may request an exception to its disclosure obligations in certain circumstances if the disclosure would be seriously damaging to the issuer.165

o The issuer must notify the ESCA and the market of the dates of any board meeting at which matters affecting the prices of its securities (such as dividend distributions, capital reductions or increases, stock splits or stock buybacks) are to be discussed and of the decisions taken thereon. If such a meeting is scheduled during trading hours, trading in the issuer’s securities will be suspended until the market is notified of the resulting decisions.166

o The issuer must notify both the ESCA and the market on which it is listed of any ownership of the issuer’s shares by directors, any trades carried out by board members or executive managers, any significant asset purchases or sales and any changes to board membership or executive management.167 The issuer must obtain approval from the market on which it is listed for the publication of announcements of profits and losses or board resolutions regarding dividend distributions.168 The issuer must provide certain notifications to the ESCA and the relevant market regarding persons who own more than 5 percent of its shares.169

o The issuer must provide to the ESCA and the market on which it is listed copies of all printed materials to be distributed to shareholders and any amendments to its articles of association.170

o The issuer must provide to the ESCA and the market on which it is listed an audited annual report within 90 days of the end of each financial year and half-yearly and quarterly financial statements reviewed by an outside auditor within 45 days of the end of each relevant period. The reports must be in English and in Arabic and must include board and auditor reports as well as other disclosure documents.171

o Foreign issuers must maintain a representative in the UAE to register shares, distribute profits and issue required reports.172

b. Additional DFM Obligations

An issuer listed on the DFM must comply with all DFM regulations, including the following:

o The issuer must provide to the DFM and publish audited annual financial statements within 120 days of the end of each financial year and half-yearly and quarterly financial statements within 30 days of the end of each relevant period.173 The financial statements must be accompanied by a management report on the issuer’s business activities during the relevant period.174


14

o If the issuer notifies the DFM of a potential compliance difficulty, the DFM may grant a compliance exemption at its discretion on a case-by-case basis.175

c. Additional ADX Obligations

An issuer listed on the ADX must comply with all ADX regulations, including the following:

o The issuer must publish and provide to the ADX audited annual financial statements within three months of the end of each financial year and unaudited quarterly financial statements within 30 days of the end of each quarter.176

o The issuer must publish and provide to the ADX an annual report containing certain specified information regarding its business and financial status.177

d. Suspensions and Cancellation of Listing

o The listing may be suspended if the issuer ceases to satisfy a listing condition or ongoing requirement, the market capitalization falls below a certain level, the net shareholders, equity falls below 50 percent of the capital or the issuer resolves to reduce its capital or sell a majority of its assets.178

o The ESCA may cancel the listing if the issuer is liquidated or ceases to exist, the listing is suspended for more than six months or the issuer ceases to carry out its business or materially changes its primary activity.179


In April 2007, the ESCA issued corporate governance regulations that apply to all issuers listed on the DFM or the ADX. Issuers must comply with the regulations by May 2010. Key requirements of the corporate governance regulations include the following:

1. Board of Directors

The composition and activities of the board of directors and its committees must comply with the corporate governance regulations, which include the following requirements:

o At least one-third of the directors must be independent, and a majority of the directors must be non-executives.180 All non-executive board members must have sufficient expertise and skill to devote to their directorship.181

o Meetings of the board must be held at least once every two months, with a majority of directors present.182

o Directors must act with loyalty and due care and comply with the law and the issuer’s organisational documents.183

o The issuer’s board must create an audit committee and a remuneration committee, each consisting of at least three non-executive directors, two of which must be independent.184 The audit committee’s tasks include managing the issuer’s relationship with its external auditor, monitoring the integrity of the financial statements and periodic reports and developing an internal control system.185 The remuneration committee is responsible for ensuring that the independent directors remain independent and administering the issuer’s remuneration and human resources policies.186

o Directors’ compensation may not exceed certain specified levels.187


15

2. Internal Control System

The issuer must implement an internal control system to monitor the issuer’s financial affairs, transactions and risk management.188 The issuer must conduct a yearly review of the internal control system and report the results to shareholders.189

3. Shareholder Rights and Consent Requirements

The issuer must establish its shareholders’ rights to share in any dividends distributed, attend and vote at general meetings, dispose of shares, obtain the issuer’s financial statements and request access to other issuer information.190 Directors must be elected by cumulative voting.191

4. Governance Report

The issuer must submit to its shareholders and the ESCA a corporate governance report on an annual basis including a description of the issuer’s corporate governance policies, any violations and steps taken in response, the composition of the board of directors and the annual review of the internal control system, as well as an undertaking by the board regarding its responsibility for the internal control system.192

V. DOHA SECURITIES MARKET

The initial listing and maintenance requirements for the DSM are set forth below. The DSM is regulated and supervised by the Qatar Financial Market Authority (“QFMA”), which was established in 2005 to serve as an independent regulatory authority for the capital markets in Qatar.193 The QFMA administers the application process for listing securities on the DSM. The DSM is managed by its Market Committee, which is responsible for the admission to trading of listed securities. The legislation under which the QFMA was established also provides for the establishment of the Qatar Securities Market Company, which is expected to assume the management of the DSM in the future.194



In order to list its shares on the DSM, the issuer must submit an application for listing to the QFMA. A Qatari issuer’s application for listing must be approved by the QFMA. A non-Qatari issuer’s application for listing must be approved by a resolution of the Council of Ministers upon the proposal of the Minister of Finance and Economy and the recommendation of the QFMA.195

Approval of the application for listing is subject to the following conditions and eligibility criteria:


o The issuer must have a minimum of 30 shareholders.196

o At least 50 percent of the nominal value of the issuer’s shares must be paid.197


o If the issuer is a Qatari joint-stock company with subscribed capital of at least QR 40,000,000 (of the equivalent thereof), it must apply to list on the DSM within one month of the shareholder meeting approving its establishment.198

o With certain exceptions, no shareholder may hold more of the capital of the issuer than is permitted by the issuer’s constitutional documents.199


16

o Unless it is newly incorporated, the issuer must publish its audited financial statements for the prior fiscal year in two local daily newspapers, one of which must be an English-language newspaper.200

o No circumstance that would allow cancellation of the listing of the issuer’s shares may exist.201

c. Issuance Prospectus

A Qatari issuer must submit an issuance prospectus when it puts its shares up for subscription. A non-Qatari issuer’s application for listing must be accompanied by an issuance prospectus.

o The issuance prospectus must contain all important information capable of assisting investors in making their investment decisions and must be prepared in accordance with requirements prescribed by the DSM.202 The information in the prospectus must be correct and must include financial statements.203

o The issuer must also submit any documents required to verify the accuracy of the information contained in the issuance prospectus.204


Once the issuer’s shares are listed on the DSM, the issuer must comply with the following continuing obligations:

a. Ongoing Contact

o The issuer must assign one of its managers to act as a liaison with the DSM to ensure prompt provision of required information to the DSM.205

b. Securities Maintenance Obligations

o The issuer must ensure that its number of shareholders does not fall below 30 for more than a month or below 15 at any time.206

c. Disclosures

The issuer must provide the following information to the DSM on an ongoing basis:

o Documents concerning proposed amendments to its articles of association.207

o Names of the members of its board of directors and its managers.208

o Any information that might affect the price of the issuer’s securities.209 The DSM is entitled to publish such information without bearing any responsibility for it.210

o The time and venue of and agenda for shareholder meetings, copies of decisions by the board of directors or shareholders relating to the shareholders or the price of the issuer’s shares, including changes to the share capital of the issuer, and information regarding the payment of the unpaid value of the issuer’s shares so that shares that have not been paid on time can be sold through a public auction.211

o Information regarding lawsuits by or against the issuer that may impact the issuer’s activities or its financial position or profitability.212


17

o Any additional explanatory information regarding the financial condition of the issuer that is capable of protecting investors.213

o Any information requested by the DSM relating to emergent circumstances that may affect the issuer’s activities or financial position.214 The DSM may require the issuer to publish summaries of such information in two local newspapers, one of which must be an English-language newspaper.215

o An annual report including audited financial statements within three months of the end of each fiscal year.216

o A semi-annual report including audited financial statements within 45 days of the end of the first six months of each fiscal year.217

o Quarterly reports on its activities, including financial statements prepared in accordance with applicable accounting rules, within three weeks of the end of each quarter.218

o Any other documents required to verify the accuracy of its periodic reports and financial statements and any other documents required by the DSM in the future.219

In addition, the issuer’s managers are required to hold explanatory press conferences at which they respond to questions from investors, journalists and others regarding the issuer’s semi-annual financial reports within three weeks of the issuance of such reports.220 The DSM may also require the issuer to publish summaries of its quarterly and semi-annual reports and financial statements in two local daily newspapers, one of which must be an English-language newspaper.221

d. Termination of Listing

The Market Committee may terminate the listing of the issuer under the following circumstances:

o The issuer fails to satisfy its current financial obligations or pay its short- or long-term debts.222

o The net shareholders’ interests fall below 50 percent of the paid-up capital of the issuer.223

o The issuer is dissolved.224

B. Recent Developments

The recent developments described below may affect the process of listing on the DSM and the continuing obligations of issuers listed on the DSM.

1. New Regulatory Framework

The QFMA is in the process of implementing a new regulatory framework for the securities markets in Qatar. As part of this effort, the QFMA is expected to issue a set of detailed rulebooks for the securities markets in Qatar.225

2. Corporate Governance Guide

The QFMA has proposed a corporate governance guide for companies listed on the DSM. The consultation period during which comments on the guide were accepted from interested parties concluded in September 2008.226


18

VI. SAUDI STOCK MARKET

The initial listing and maintenance requirements for the Tadawul are set forth below. The Tadawul is regulated by the Capital Market Authority, an administrative body reporting directly to the Council of Ministers.227 In 2008, the Capital Market Authority has increased its supervision of the Tadawul and the application of its listing rules and is an increasingly active regulator. The Capital Market Authority has already begun the process to allow non-Saudi nationals to own shares in companies listed on the Tadawul.



The issuer’s securities may be admitted to the official list upon satisfaction of all relevant requirements under the Capital Markets Law and listing rules promulgated thereunder.228 To be eligible for listing on the Tadawul, the issuer must meet the following conditions and eligibility criteria:


o Minimum Distribution Requirements: The issuer must have at least 200 public shareholders, and at least 30 percent of the issued shares must be owned by the public.229

o Market Value of Publicly Held Shares: The expected aggregate market value of the issuer’s shares must be at least SR 100 million.230

b. Threshold Requirements

o The issuer must be a Saudi joint stock company.231

o The issuer must have been conducting as its main activity an independent business for a period of no less than three financial years under substantially the same management. An issuer that does not meet this requirement may still be approved if is determined that admission will be in the best interests of both the issuer and investors.232

o An issuer must have a minimum of three financial years of published audited financial reports prepared in accordance with the accounting standards set by the Saudi Organization for Certified Public Accountants.233

c. Underwriting

o Any issue of securities of a class not previously admitted to the official list must be fully underwritten by an underwriter authorised by the Capital Market Authority.234

d. Application for Admission

o An issuer seeking admission of its securities to the official list must pay a fee and submit certain documents to the Capital Market Authority.

e. The Prospectus

o The prospectus must contain all information necessary to enable an investor to make an assessment of the activities, assets and liabilities, financial position, management and prospects of the issuer.235 The required information includes (i) information regarding the issuer, the issuer’s shares and its share capital, (ii) a declaration stating that the directors accept responsibility for the accuracy of the information in the prospectus and disclaiming the Tadawul and the Capital Market Authority from any responsibility for it, (iii) information regarding the advisors and experts


19

involved in the issuance, (iv) information regarding the issuance to which the application relates, (v) information regarding the issuer’s group and its business, (vi) financial information, including a comparative table of consolidated financial information, or in certain circumstances an independent certified auditor’s report, based on the issuer’s audited financial statements for the two financial years preceding the application and a report on the issuer’s borrowings and indebtedness at the time of application, (vii) information regarding the issuer’s directors and executives, and (viii) information regarding public inspection of the issuer’s audited financial statements and certain other documents.236

o The prospectus must be in the Arabic language.237

o The prospectus must not be published or made available to the public without the written approval of the Capital Market Authority.238

o A supplementary prospectus must be submitted to the Capital Market Authority for approval if at any time after the prospectus has been approved and before admission to the official list the issuer becomes aware that there has been a significant change in material matters contained in the prospectus, or new matters become known to the issuer that would have been required to be included in the prospectus.239

o The issuer must make available to the public the prospectus at least 14 days prior to admission to the official list.240

f. Securities Eligibility Criteria

o The securities must conform with the statutory conditions of the Kingdom of Saudi Arabia and be duly authorised according to the issuer’s by-laws or other constitutional documents.241

o The securities must be transferable and tradable.242

o The securities must be registered and settled centrally through the Depositary Centre.243

g. Oversight

o The Capital Market Authority may at any time suspend or cancel a listing if, among other things, it considers it necessary for the protection of investors.244


Once admitted to the official list, the issuer remains subject to the following continuing obligations:

o The issuer must notify the Capital Market Authority and the public of any major development in the issuer’s business or financial position which may result in substantial movements in the price of its listed securities.245

o The interim annual accounts of a listed company must be approved by the board of directors.246

o The issuer must attach to its annual accounts a report issued by the board of directors including all relevant factors affecting the issuer’s business which an investor might require to assess the assets, liabilities and financial position of the issuer.247


20

o The issuer must notify the Capital Market Authority of, among other things, any proposed changes in its capital structure, any decision to declare dividends, any decision to call, repurchase, draw, redeem or buy any of its securities, any decision not to make payment on its debt instruments, any change in the rights of any class of listed securities,248 any change in its by-laws and any change in its external auditors.249

o The issuer may not issue shares of the same class as the shares that are listed for a period of not less than six months following the date of admission of the shares to the official list.250

o The issuer must apply to the Capital Market Authority for the listing of any further securities of the same class as existing listed securities and may not issue such securities without approval by the Capital Market Authority.251


The Capital Market Authority may, as it considers necessary for the protection of investors, require the issuer to comply with any corporate governance rules it deems appropriate whether in relation to the qualifications of the directors, senior management, audit committee or external auditor of the issuer, or the competency of any of them, or in relation to the responsibilities or powers of any of them or in relation to the decision making processes or otherwise.252

VII. MUSCAT SECURITIES MARKET

The initial listing and maintenance requirements for the MSM are set forth below. The MSM operates as a governmental entity that is both financially and administratively independent of its regulatory body, the Capital Market Authority (“CMA”).253 The MSM is composed of three distinct markets: the Regular Market, the Parallel Market and the Third Market. Securities are listed upon a resolution of the Director General of the MSM, who decides the suitable market for the listing.254



To be eligible for listing on the MSM, an issuer must meet the following conditions and eligibility criteria:

a. Eligibility Criteria For Regular Market

o Joint stock companies with paid-up capital of at least RO 2 million and shareholders’ equity equal to or greater than paid-up capital are eligible to be listed on the Regular Market.255

o The issuer must have achieved a net profit during the two years prior to listing.256

o The issuer’s shares must be traded on at least 30 days and share turnover must be at least 5 percent per year.257

o Non-Omani joint stock companies may only be listed on the Regular Market.258

b. Eligibility Criteria For Parallel Market

o Newly established joint stock companies, joint stock companies with shareholders’ equity of at least 50 percent of paid-up capital and recently established investment funds that take the form of joint stock companies are eligible to be listed on the Parallel Market.259


21

c. Eligibility Criteria For Third Market

o Closed stock companies and joint stock companies with shareholders’ equity of less than 50 percent of paid-up capital are eligible to be listed on the Third Market.260

d. Application for Admission and Supporting Documents for Omani Joint Stock Companies

An Omani joint stock company seeking admission of its securities must submit a listing application and the following documents:

o A commercial registration certificate together with all official documents issued by the Commercial Register.261

o A list of authorised signatories and specimens of their signatures.262

o Copies of the issuer’s memorandum, articles of association and prospectus.263

o An attested copy of the minutes of the constituent general meeting.264

o A list of the shareholders’ names approved by the issuance manager.265

e. Application for Admission and Supporting Documents for Non-Omani Joint Stock Companies

A non-Omani joint stock company seeking admission of its securities must submit a listing application and the following documents and information:

o Company Information: Corporate name, location of head office, names of authorised signatories, address, authorised capital, subscribed capital, paid-up capital, memorandum and articles of association.266

o Information on the Board of Directors: Names of directors and executive management, remuneration and method of election, number of shares owned by each director or officer and an indication of whether any director or officer has been convicted of a crime relating to honesty, has been declared bankrupt or has failed to pay financial obligations.267

o Information on Shares and Shareholders:

o Types, classes and rights of shares issued.268

o Movement of the share price in the last three years.269

o Indication of whether the company has been listed in a market other than the market on which it is listed in its country of incorporation.270

o Names of shareholders holding 10 percent or more of the issuer’s capital.271

o Financial Statements: Audited financial statements for the last three years; quarterly financial statements covering the period from the end of the last fiscal year to the end of the last quarter before the date of application.272

o Information on the Activities of the Company:

o The issuer’s main activity.273

o Fundamental changes and developments in the issuer during the three years prior to the application that have had an impact on the performance of the issuer and its share value.274


22

o Information on any development or expansion plans of the issuer.275

o Information on the issuer’s subsidiaries, including ownership of shares in the subsidiaries and the financial statements of the subsidiaries.276


o A listed issuer must comply with the rules and regulations of the CMA.277

o A listed issuer must provide the CMA with access to inspect and audit its business and operations.278

o A listed issuer may be de-listed in the event it changes form, merges, or liquidates.279

o The CMA may transfer the listing of a security from one MSM market to another MSM market as the public interest may require.280

VIII. BAHRAIN STOCK EXCHANGE

The BSE is an independent authority which falls within the regulatory jurisdiction of the Capital Markets Supervision Directorate of the Central Bank of Bahrain (“CBB”), established in 2006 as the successor agency to the Bahrain Monetary Authority. The BSE, in conjunction with the CBB, regulates the initial listing process and the ongoing maintenance requirements for listings on the BSE. The Board of Directors of the BSE (“Board”) is responsible for considering applications to list shares on the BSE.


Both Bahraini and foreign joint stock companies may apply to list their shares on the BSE.281 The initial listing and maintenance requirements for the BSE are set forth below.

1. Listing Requirements for Bahraini Issuers

Generally, to be eligible for listing by the BSE, an issuer must meet the following conditions and eligibility criteria:


o The issuer must have at least 500,000 issued shares.

o The issuer must have at least 100 shareholders registered in its register.

o The issuer’s paid-up capital must be at least BD 500,000 or its equivalent, and at least 50 percent of the value of the issued shares must be paid-up.

o The value of each of the issued shares in the market must not be less than the paid-up portion of the nominal value of each share.282


o The issuer must comply with all of the terms of the Commercial Companies Law of Bahrain.

o The issuer must have been established for at least two years and have published audited balance sheets for the two years preceding the application.

o The total net assets of the issuer must exceed its paid-up capital by at least 20 percent.

o The issuer’s total annual turnover must be at least BD 500,000.


23

o The issuer must have realised profits in the two successive years preceding the date of application.

o The issuer must have a transfer and registration office in Bahrain.

o The financial position of the issuer must be sound in terms of its assets, liquidity, financial structure and efficiency of performance.

o The issuer must publish its financial statement in one daily newspaper prior to its shares being approved to trade on the BSE.

o The issuer must execute a listing agreement with the BSE and comply with its terms.

o The issuer must comply with any other conditions stipulated by the Board from time-to-time.283

o The issuer must pay the listing fee to the BSE.284


o Within each class of shares of the issuer, the rights of all shareholders must be equivalent.285

2. Listing Requirements for Foreign Issuers

A foreign issuer is required to comply with the following conditions and eligibility criteria to list its shares on the BSE:


o The issuer must have at least 100 registered shareholders.286

o The issuer’s paid-up capital must be at least US$10 million.287


o The issuer must be a public shareholding company listed in its country of incorporation or a closed company that was established at least three years prior to the date of listing.

o The issuer must have realised a net profit on its principal activities for the three years preceding the date of application.

o The issuer’s financial position must be sound.

o The issuer must publish audited annual financial statements and semi-annual financial statements reviewed by its auditor.

o The issuer must appoint a representative office in Bahrain to undertake the registration of shares, distribution of dividends and other related matters.

o The issuer must execute a listing agreement with the BSE and comply with its terms.288

o The issuer must pay the listing fee to the BSE.289


o Neither the issuer’s organisational documents nor the laws of its country of incorporation may impose restrictions on the transferability of the shares.290


24

d. Banks and Investment Companies

o Foreign banks and financial institutions must obtain an additional approval from the CBB in order to list their shares on the BSE.291

3. Required Documents

a. Application Documents

o With the application to list, the issuer must submit to the BSE audited financial statements for the five preceding years (to the extent possible), a copy of the issuer’s memorandum and articles of association, a specimen share certificate and transfer document, a copy of the issuer’s board resolution approving the listing, the names and specimens of signatures of the issuer’s authorized signatories, the executed listing agreement and any other information or statements requested by the BSE.292

o If shares are issued in Bahrain, the issuer must prepare a prospectus in the form and containing the information required by the CBB. Generally the prospectus must include all information that investors may reasonably require to make an informed assessment of the financial position and prospects of the issuer and the rights attached to the shares. Prior to issuing its shares, the issuer must obtain the CBB’s approval of the prospectus and publish summaries of the prospectus in one Arabic-language and one English-language newspaper in Bahrain.293


a. Listing Requirements

o The issuer must continue to satisfy the conditions and eligibility criteria for listing described above.

o The volume of trading in the issuer’s shares shall not be less than the minimum limit prescribed by the BSE.294

o The issuer must issue semi-annual financial statements.295 The issuer must publish audited annual financial statements within three months of the end of its financial year.296

o The issuer must hold its ordinary general meeting at least once a year within three months of the end of its financial year.297

o The issuer must comply with the terms of its listing agreement with the BSE. The listing agreement requires the issuer to provide certain notifications and documents to the BSE on an ongoing basis.298 The issuer is required to submit any board resolutions regarding the distribution of dividends and any announcements regarding its profits and losses to the BSE for approval by the BSE prior to their publication.299

o The issuer must not release misleading information to the BSE or to investors.300

o The issuer must pay an annual subscription fee to the BSE.301

b. Disclosure Standards

All listed companies are required to comply with the CBB’s Disclosure Standards, which seek to ensure that every listed issuer makes available to the public the information necessary for investing and that each investor enjoys equal access to


25

such information.302 Certain significant obligations imposed by these standards are described below.

o Immediate Announcements

The issuer generally must immediately publicly disclose any information that is likely to have a significant effect on its share price or is likely to be considered important by investors.303 This includes information concerning its property, business, financial condition and prospects, mergers and acquisitions, dealings with employees and others, significant changes in share ownership, significant borrowings, sales of securities, declarations of dividends and significant changes in management.304 The issuer must make public disclosures by releasing the information simultaneously to the CBB, the BSE and the media.305

The issuer is required to provide certain additional notifications and documents to the CBB.306

o New Issues

The issuer must obtain shareholder approval for any issuance of securities and must comply with certain requirements in connection with any issuance of securities, including rights issues and schemes involving the issuance of shares to employees.307

o Periodic Reports

The issuer must submit preliminary financial statements, a half-yearly report and a quarterly report prepared in accordance with IAS to the CBB within two months of the end of the relevant period.308

o Annual Financial Statements

The issuer must issue its annual report to shareholders and the BSE within six months of the end of its financial year. The annual report must contain the required information, including audited annual financial statements prepared in accordance with IAS and directors’ and management’s reports on the results.309

o Statements, Transfers, Transmission and Registers

The issuer must comply with certain requirements relating to allotment of securities, sending of statements, registering of transfers, design of proxy forms and providing share register history to the CBB.310 Investors are entitled to request share certificates, and the issuer’s share certificates must comply with certain requirements.311

o Communications with Shareholders

All circulars, notes of meetings, proxy forms and advertising material must be submitted to the CBB for approval prior to publication.312

Copies of all circulars, notices and other documents issued by the issuer, copies of all resolutions concerning non-routine business and proposed amendments to the issuer’s organizational documents must be submitted to the CBB.313

The issuer must inform shareholders of all shareholder meetings and take other actions to ensure that shareholders are able to exercise their rights. The issuer must provide an explanatory circular to shareholders if any shareholder meeting will include business other than routine business. The issuer must send copies of any relevant circulars sent to any class of shareholders to all holders of the issuer’s listed securities.314


26

The issuer must appoint a registrar and/or a paying agent in Bahrain unless it performs these functions itself.315

Unless shareholders otherwise permit, the issuer must offer equity securities issued for cash to its existing shareholders and must obtain shareholder consent for dilutive issuances of equity securities for cash by subsidiaries.316

o Transactions by Directors and Executive Officers of Listed Companies

The issuer must adopt rules governing dealings by directors, senior management and associated persons in its listed shares that are no less stringent than the corresponding rules issued by the CBB.317 Generally, these rules prohibit a director or senior manager from dealing in shares when in possession of unpublished, price-sensitive information.318

o Rumours

The issuer is required to correct or confirm significant rumours that are likely to have or have had an effect on the price of its shares.319

c. Delisting

The BSE may delist the issuer in any of the following circumstances:

o The issuer violates the Commercial Companies Law of Bahrain.

o The issuer loses its legal status as a result of a merger with another company.

o The issuer is liquidated.

o The issuer makes a major change in its main activity.

o The issuer fails to satisfy the listing requirements outlined above.

o The issuer fails to realise profits for two consecutive years.320

B. Recent Developments

1. Volume 6 of the Capital Market Law

The CBB is in the process of developing Volume 6 of the Capital Markets Law, which is expected to contain regulations regarding prospectuses, listing requirements and disclosure standards applicable to issuers.

IX. KUWAIT STOCK EXCHANGE

The initial listing and maintenance requirements for the KSE are set forth below. The KSE is the only national stock exchange in Kuwait and is an independent, government entity. The KSE consists of an official market (the “Official Market”) and a smaller parallel market (the “Parallel Market”). Each market has its own listing requirements, and the listing requirements of the Parallel Market are less stringent than those of the Official Market. Smaller companies that do not qualify for listing on the Official Market, therefore, generally are able to list on the Parallel Market. The Market Committee of the KSE regulates the exchange, with additional oversight provided by the Central Bank of Kuwait and the Ministry of Commerce and Industry.321 The Market Committee must approve applications to list securities on the KSE.

The by-laws of the KSE provide rules for the registration and listing of securities. Shares of a public Kuwaiti shareholding company, shares of a closed Kuwaiti shareholding company and shares of a non-Kuwaiti joint stock company that has been licensed for listing by the Market Committee may be listed on the KSE.


27



In order to list its shares on either exchange, an issuer must submit a listing application to the KSE. The KSE Market Committee reserves the right to reject a listing application at its sole discretion.322 If the application is accepted, the issuer must pay the enlistment fee applicable to the market on which its shares will be listed.323 The issuer must comply with the KSE’s enlistment procedures within three months of the approval of its application, if it is listing on the Official Market, and within 90 days of the approval, if it is listing on the Parallel Market.324

Approval of the application to list is subject to the following conditions and eligibility criteria:

a. Listing Requirements that Apply to Listings on Either Market

o The listing of the issuer’s shares must be approved by the issuer’s general assembly.325

o A non-Kuwaiti issuer must be listed on the stock market of its country of origin.326

o If the issuer is a closed company, strategic partners (defined as shareholders owning at least 5 percent of the issuer’s capital) must together hold at least 25 percent of the issuer’s capital, not trade 50 percent of the total strategic shares in the year following listing and not trade the remaining 50 percent of the total strategic shares in the two years following listing.327 An individual strategic shareholder may sell his or her entire holdings to another investor, who must comply with the foregoing restrictions on strategic shareholders for the remaining period.328

o The issuer’s board members must agree to adhere to all of the KSE’s rules and to provide the KSE with all declarations and information required by it.329

b. Listing Requirements for the Official Market

In addition to the listing requirements that apply to listings on either market, an issuer applying to list on the Official Market must satisfy the following conditions and criteria:

o The issuer’s paid-up capital must be at least KD 10 million or its equivalent, and its shareholders’ equity must be at least 115 percent of the average paid-up capital for the preceding two years.330

o The issuer must have achieved a net profit in each of the two years preceding listing of at least 7.5 percent of the average paid-up capital.331

o If the issuer is a closed Kuwaiti shareholding company, it may not list within one year of increasing its capital by more than 50 percent or within three years of changing its corporate form from a limited liability company to a closed Kuwaiti shareholding company.332

o The issuer’s shares must be transferable under the law under which they were established, and the period required to pass under the Kuwaiti companies law before the founders and shareholders of a Kuwaiti shareholding company are permitted to trade their shares must have passed.333


28

o The issuer must float, at a minimum, 30 percent of its total issued share capital by way of an initial private placement and private offering through an independent manager.334

o Shares representing 25 percent of the paid-up capital of the issuer will be retained by the clearing chamber for at least two years from the listing date. These shares may be disposed of by the relevant shareholders, but only to existing shareholders. The limitation on disposals will continue to apply to any purchaser of these shares for the remainder of the two-year period.335

c. Listing Requirements for the Parallel Market

In addition to the listing requirements that apply to listings on either market, an issuer applying to list on the Parallel Market must satisfy the following conditions and criteria:

o The issuer’s issued capital must be fully paid-up and must be at least KD 3 million or its equivalent.336 The issuer’s shareholders’ equity must equal or exceed its paid-up capital.337

o The company must have a minimum of 50 shareholders for its first KD 3 million of share capital and a proportionate increase in the number of shareholders for its share capital in excess of KD 3 million.338 The KSE is usually flexible in respect of the number of shareholders that are required in excess of the minimum 50 shareholders.

o The issuer must have achieved a net profit in each of the two years preceding listing, and the average yearly net profit must equal at least 5 percent of paid-up capital.339

o If the issuer is a closed Kuwaiti shareholding company, it may not list within one year of increasing its capital by more than 50 percent or changing its corporate form from a limited liability company to a closed Kuwaiti shareholding company.340

o The issuer’s shares must be transferable under the by-laws adopted at the time of the issuer’s formation, and the period required to pass under the Kuwaiti companies law before the founders and shareholders of a Kuwaiti shareholding company are permitted to trade their shares must have passed.341

d. Required Documents

o The issuer must name a managing firm that will act as a guarantor to be responsible for the marketing activities for the issuer’s shares. The manager must provide the KSE with a certificate containing, among other things, a statement that it has carried out the necessary due diligence to ensure that all information presented to the market is accurate and complete and does not omit any information regarding the issuer that must be included to make it not be misleading and an undertaking to update the information used to sell the issuer’s shares when necessary prior to completing the sales of the shares.342

o The issuer must submit for approval by the KSE a detailed study done by an external specialist on the fair price for its shares.343

o The issuer must provide the KSE with a copy of the selling prospectus for its shares. The selling prospectus must contain certain enumerated information, including audited financial statements for the previous three years. The issuer must obtain the KSE’s approval of the selling form (the “offering form” or the “subscription form”) and publish it prior to listing.344


29


Once the issuer’s shares are listed on the Official Market or the Parallel Market, the issuer must comply with, among other things, the following continuing obligations:

o The issuer must maintain its shareholders’ register with the clearing chamber and must adhere to all related instructions and requirements of the KSE.345

o The issuer must pay the annual subscription fee applicable for the market on which it is listed to the KSE.346

o If the issuer’s capital does not exceed KD 10 million and it increases its capital to three times or more of its original value within one year, the issuer’s shares will be suspended from trading.347

o The issuer must notify the KSE of the time and agenda of all ordinary and extraordinary general assembly meetings. The issuer must send three copies of the minutes of all ordinary and extraordinary general assembly meetings to the KSE.

o The issuer must hold its general assembly meeting following the end of its financial year and within 45 days of the KSE’s approval of its audited financial statements.348

o The issuer must notify the KSE of all amendments to the company’s articles of association or its commercial register information.

o The issuer must notify the KSE of the time of any board of directors’ meeting called to approve its interim or annual financial statements, to propose any increase or decrease in the issuer’s capital or to propose any amendments to the rights attaching to its shares.

o The issuer must notify the KSE of certain significant asset sales or purchases, share purchases that result in another company becoming a controlled subsidiary and certain changes relating to its long term loans or instruments.

o The issuer must obtain the KSE’s approval to buy its shares.

o The issuer must notify the KSE of any administrative decisions, cases, facts or circumstances that may affect the price of its shares in the market.

o The issuer must notify the KSE of certain changes relating to its share certificates or the rights arising from them.

o The issuer must provide annual and quarterly audited financial statements, signed by an authorised signatory of the issuer and by the auditor.

o The issuer must notify its shareholders of any share dividends, subscription rights or privileges attaching to shares by means of publishing a notification in three local newspapers or by means of registered mail.

o The issuer must notify the KSE of any changes to the members of the board of directors or its general manager.

o The issuer must provide the KSE with a detailed account of the ownership of its shares by the members of its board of directors and entities they represent and must obtain and provide the KSE with a copy of a written undertaking from them to not dispose of their shares during their tenure as board members.


30

o The issuer must provide the KSE with a written undertaking signed by all board members not to use inside information to advance their personal interests or the personal interests of any third parties.

o The issuer must comply with any other requirements imposed by the KSE.

B. Transparency and Disclosure

Under laws enacted to ensure transparency and appropriate and timely disclosure, a shareholding company that is listed on the KSE must disclose to the KSE the shareholdings of any of its shareholders that directly or indirectly hold shares representing 5 percent or more of its capital at any time as well as any changes to their percentage ownership.349

C. Recent Developments

The KSE Market Committee recently released a new set of listing regulations, which are expected to take effect in the near future.350 The changes made by the new regulations include the following:

o Any listed company which intends to increase its share capital to 300 percent or more of its existing share capital within one financial year must submit to the KSE a technical study from a specialised firm on the feasibility of the increase, how it would be utilized, the call dates and the premium.351 The KSE may suspend the shares of the issuer if it believes that trading in the shares after the capital increase would prejudice the interests of traders or market conditions. Any suspension would continue until the company issues its next audited financial statements, provided that the suspension may not last less than three months or more than twelve months from the date of the capital increase call.352

o The new listing regulations include a number of amendments to the previous listing rules, which are reflected in the summary of the listing rules above, including the addition of the requirement that 25 percent of the paid-up capital be retained by the clearing chambers for two years from the listing date.353


31

ENDNOTES

1 Gulfbase, GCC Economic Overview, available at

http://www.gulfbase.com/site/interface/thegcc/gccoverview.aspx. 2 “Emerging Markets Economic Strategy”, Merrill Lynch, 14 October 2008. 3 Gulf Capital Research Group, IPO Market During 2007, at slide 17 (2007). 4 Id. at slide 10. 5 “Gulf IPO value doubles despite cash crunch” by Nissar Hoath and Nadim Kawach, Emirates Business, 12

October 2008, available at http://www.business24-7.ae/Articles/2008/10/Pages/10122008_9cce707bf0154f06ba3ec131697e187e.aspx.

6 Gulf Capital Research Group, IPO Market During 2007, at slide 12 (2007). 7 Dubai International Financial Exchange, Annual Report, at 8 (2007). 8 J. Cordahi, DP World in Landmark IPO, ¶ 11 (2007), available at http://www.arabianbusiness.com/502280-

talk-of-dp-world-ipo-intensifies. 9 KPMG, Understanding the challenges of going public in the UAE and Oman, at 12 (2006). 10 Dubai International Financial Exchange, Annual Report, at 8 (2007). 11 Id. at 7. 12 Rule 144A(a)(1). 13 Rule 904 of the US Securities Act. 14 Rule 10b-5(b) of the US Exchange Act. 15 Id. 16 Federal Securities Litigation, at 6-42. See, for example, US Exchange Act Sections 21(d)(3) (providing for

money penalties in SEC civil action), 32(a) (providing for criminal penalties for wilful violations of the US Exchange Act).

17 Regulation S-K, Item 503(a) as required by F-1, Item 3. 18 Id. at Item 503(c) as required by F-1, Item 3. 19 Form 20-F, Item 3.D. 20 Id. at Item 4.B. 21 Id. at Item 4 and F-1, Item 4. 22 Id. at Item 5 and F-1, Item 4. 23 Id. 24 Id. at Item 8. 25 Id. 26 Id. at Item 3. 27 Id. 28 Regulation S-X, Rule 11-01a and Rule 11-01(b). 29 Id. at Rule 11-02. 30 International Reporting and Disclosure Issues, Section X.D. 31 Id. at Item 6 and F-1, Item 4. 32 Id. at Item 7 and F-1, Item 4. 33 Id. at Item 7 and F-1, Item 4.


32

34 Id. at Item 9 and F-1, Item 4. 35 Id. 36 Id. 37 Id. 38 Id. at Item 10 and F-1, Item 4. 39 Id. at Item 11 and F-1, Item 4. 40 Rule 12b-20 of the US Exchange Act. 41 EC/809/2004 of 29 April 2004. 42 Id. 43 Id. at Annex I, Items 1, 6, 7 and 21. 44 Id. at Item 5. 45 Id. at Item 22. 46 Id. at Item 19. 47 Id. at Item 4. 48 Id. at Item 20. 49 Id. 50 Id. at Item 9. 51 Id. at Item 13. 52 Id. at Item 10. 53 Id. at Item 20. 54 Id. at Item 12. 55 Id. 56 Id. at Annex III, Item 3. 57 Id. at Annex I, Item 20. 58 Id. at Item 14. 59 Id. at Item 21. 60 Id. at Item 18. 61 Id. at Annex III, Item 5. 62 Id. at Item 3. 63 Id. 64 DIFX, An Introduction to Listing on the DIFX 5-6 (2006). 65 The DFSA administers the DIFC Markets Law. Markets Law 2004, DIFC L. No. 12 of 2004 (as amended)

(hereinafter “DIFC Markets Law”). The DFSA promulgates and administers the Offered Securities Rules, pursuant to and in furtherance of its authority under the DIFC Markets Law. DFSA, The DFSA Rulebook, Offered Securities Rules (2005) (as amended) (hereinafter “DFSA Offered Securities Rules”).

66 DIFX, Listing Rules, intro., § 1.8 (2005) (hereinafter “DIFX Listing Rules”). 67 Id. § 5.5, app. E, pt. 1. 68 Id. § 9.4. 69 Id. app. E, pt. 1.


33

70 Id. 71 Id. § 4. 72 Id. § 5.1.3. 73 Id. app. E, pt. 1. 74 Id. 75 Id. These provisions include: capital structure details, notice of any non-voting shares, notice of any

restricted voting shares, voting rights for preference shares when dividends are more than six months in arrears or for any resolution on the winding-up of the company, freedom from liens for fully-paid shares, discretionary closing of the register, shareholder’s right to receive share certificates, provision for corporate execution of a form of proxy, rules for untraceable shareholders, rules on dividend payments, limits on forfeiture of unclaimed dividends and prohibition of voting by interested directors. Id. app. D.

76 Id. § 16.1. 77 Id. § 16.2. 78 Id. §§ 19-20; DFSA Offered Securities Rules ch. 10. 79 DFSA Offered Securities Rules § 10.1.1; DIFX Listing Rules § 19.1. 80 DIFX Listing Rules § 14.1.14. 81 Id. app. E, pt. 1. 82 Id. app. E, pt. 2. 83 Id. 84 Id. 85 DIFC Markets Law § 17.14. 86 Id. § 17.15. 87 Id. § 17.16. 88 DFSA Offered Securities Rules § 7.3. 89 DIFX Listing Rules § 14.1. The requirements of the prospectus are further governed by the DFSA and the

DIFC. DFSA Offered Securities Rules chs. 5-6, App 1; DIFC Markets Law § 15.2. 90 DIFX Listing Rules § 6.1, app. B. 91 Id. §§ 6.1-.3. 92 Id. § 6.4. 93 Id. §§ 2.1, 18.1.3, 21.1. 94 Id. §§ 22.1-.2. 95 Id. § 2.2. 96 Id. § 18.1. 97 Id. §§ 18.1, 27.2, 32.2, app. F, pt. 2. 98 Id. app. F, pts. 1-2. 99 DIFC Markets Law § 23; DFSA Offered Securities Rules § 8.2, App 2; DIFX Listing Rules § 28. 100 DIFX Listing Rules § 28.3. 101 Id. app. F, pt. 1. 102 Id. 103 Id. § 31.


34

104 Id. app. F, pt. 1. 105 DIFC Markets Law § 27. 106 Id. § 29. 107 Id. § 28. 108 DIFX Listing Rules app. F, pt. 2. 109 DIFC Markets Law §§ 19.1-.8. 110 DFSA Offered Securities Rules § 8.4.1, App 3. 111 Id. App 3.3. 112 DIFX Listing Rules app. F, pt. 3. 113 DIFC Markets Law § 31. 114 Id. § 20; DFSA Offered Securities Rules § 8.4.1, App 4. 115 DIFC Markets Law § 21. 116 Id. § 21.2; DFSA Offered Securities Rules App 4.3.4. 117 DFSA Offered Securities Rules App 4.3. 118 Id. App 4.3.2. 119 DIFX, Proposed Changes to the DIFX Listing Rules (2008); DIFX, Details of Amendments to the DIFX

Listing Rules (2008). 120 DIFX, Proposed Changes to the DIFX Listing Rules (2008); DIFX, Details of Amendments to the DIFX

Listing Rules (2008). 121 Regulations as to the Functioning of the Securities & Commodities Authority, Council of Ministers Res. No.

13 of 2000 (as amended); Regulations as to the Functioning of the Market, Council of Ministers Res. No. 3 of 2001 (hereinafter “ESCA Market Regulations”).

122 Regulations as to the Listing of Securities and Commodities, Council of Ministers Res. No. 12 of 2000 (as amended) (hereinafter “ESCA Listing Regulations”).

123 DFM, Listing shares of public joint stock companies incorporated in the UAE, http://www.dfm.ae/pages/default.aspx?c=601 (hereinafter “DFM Listing Requirements for UAE Companies”); DFM, Listing shares of foreign public joint stock companies, http://www.dfm.ae/pages/default.aspx?c=602 (hereinafter “DFM Listing Requirements for Foreign Companies”); ADX, Rules Relating to Abu Dhabi Securities Market § 3.3 (hereinafter “ADX Listing Rules”).

124 ESCA Listing Regulations §§ 2, 5, 6.1(A), 15; ESCA Market Regulations § 25. 125 ESCA Listing Regulations § 12. 126 Id. § 13. 127 ESCA Market Regulations 26; DFM Listing Requirements for UAE Companies; ADX Listing Rules 3.3. 128 ESCA Market Regulations § 26.2. 129 ESCA Listing Regulations § 6.1. 130 Id. § 6.1(A). 131 Id. § 6.1(B). 132 Id. § 6.1. 133 Id. 134 Id.


35

135 Id. § 6. 136 Id. 137 Id. 138 Id.; DFM Listing Requirements for UAE Companies. 139 ESCA Listing Regulations § 6. 140 DFM Listing Requirements for UAE Companies. 141 Id. 142 ADX Listing Rules §§ 3.2(A), 3.3(C)-(E). 143 Id. § 3.3(D)-(E). 144 ESCA Listing Regulations § 6; Regulations as to Disclosure and Transparency, ESCA Res. No. 3 of 2000 §

31 (as amended) (hereinafter “ESCA Disclosure Regulations”); DFM Listing Requirements for UAE Companies.

145 Regulations as to the Listing of Foreign Companies, ESCA Res. No. 7 of 2002 § 1.6 (as amended) (hereinafter “ESCA Listing Regulations for Foreign Companies”).

146 ESCA Listing Regulations for Foreign Companies § 1. 147 Id. 148 Id. 149 Id. 150 Id. 151 Id.; ESCA Disclosure Regulations § 31; DFM Listing Requirements for Foreign Companies. 152 ESCA Listing Regulations for Foreign Companies § 1; DFM Listing Requirements for Foreign Companies. 153 ESCA Listing Regulations for Foreign Companies § 1. 154 Id. 155 DFM Listing Requirements for Foreign Companies. 156 Id. 157 Id. 158 ADX Listing Rules §§ 3.2(A), 3.3(C)-(E). 159 Id. § 3.3(D)-(E). 160 ESCA Listing Regulations § 19. 161 Id. 162 Id.; DFM Listing Requirements for UAE Companies; DFM Listing Requirements for Foreign Companies;

ADX Listing Rules § 4.1. 163 ESCA Listing Regulations § 19; ESCA Disclosure Regulations § 34. 164 ESCA Disclosure Regulations § 34. 165 Id. § 35. 166 Id. § 36.11. 167 Id. 168 ESCA Listing Regulations § 19. 169 Id. § 19.3; ESCA Disclosure Regulations § 36.


36

170 ESCA Disclosure Regulations § 19; DFM Listing Requirements for UAE Companies; DFM Listing

Requirements for Foreign Companies. 171 ESCA Disclosure Regulations § 36. 172 ESCA Listing Regulations for Foreign Companies § 1.11. 173 DFM Listing Requirements for UAE Companies; DFM Listing Requirements for Foreign Companies. 174 Id. 175 Id. 176 ADX Listing Rules § 4.1. 177 Id. § 4.2. 178 ESCA Listing Regulations § 20; ESCA Disclosure Regulations § 14. 179 ESCA Listing Regulations § 22. 180 Corporate Governance Code for Joint-Stock Companies and Institutional Discipline Criteria, ESCA Res. No.

32 of 2007 § 3.2. The corporate governance regulations set forth requirements for a director to be considered independent, which include a requirement that neither the director nor a relative has served as an executive or engaged in a significant financial transaction with the issuer or an affiliate in the two preceding years. Id. § 1.

181 Id. § 3.2. 182 Id. § 3.6. 183 Id. § 5.4. 184 Id. § 6. 185 Id. § 9. 186 Id. § 6. 187 Id. § 7. 188 Id. § 8. 189 Id. 190 Id. § 12. 191 Id. 192 Id. §§ 5, 14. 193 Law No. 33 of 2005 ch. II (as amended); QFMA, Home, http://myqfma.com/en/index.php?id=home; QFMA,

Brief Background on QFMA Establishment, http://myqfma.com/en/index.php?id=history. 194 Law No. 33 of 2005 ch. III. 195 DSM Internal Regulations art. 5 (2008). 196 Id. art. 38. 197 Id. 198 Id. art. 37. 199 Id. art. 38. 200 Id. 201 Id. 202 Id. arts. 45, 46. 203 Id.


37

204 Id. arts. 44, 52. 205 Id. art. 48. 206 Id. art. 38. 207 Id. art. 44. 208 Id. 209 Id. art. 48. 210 Id. 211 Id. 212 Id. 213 Id. 214 Id. 215 Id. 216 Id. arts. 41, 44. 217 Id. 218 Id. art. 50. 219 Id. arts. 44, 52. 220 Id. art. 48. 221 Id. art. 51. 222 Id. art. 40. 223 Id. 224 Id. 225 QFMA, QFMA News, http://myqfma.com/en/index.php?id=detailnews#section1. 226 QFMA, QFMA News, http://myqfma.com/en/index.php?id=detailnews#section1. 227 Kingdom of Saudi Arabia Capital Markets Law, Royal Decree No. m/3 art. 4(a) (2003). 228 Id. art. 19. 229 Kingdom of Saudi Arabia Listing Rules art. 9(b) (as amended). 230 Id. art. 9(f). 231 Id. art. 8(a). 232 Id. art. 8(b). 233 Id. art. 8(c). 234 Id. art. 10(a). 235 Id. art. 12(a). 236 Id. Annex 5. 237 Id. art. 12(f). 238 Id. art. 13(a). 239 Id. art. 15(a). 240 Id. art. 16(a). 241 Id. art. 9(a).


38

242 Id. art. 9(d). 243 Id. art. 9(e). 244 Id. art. 21. 245 Id. art. 25(a). 246 Id. art. 26(a). 247 Id. art. 27(a). 248 Id. art. 32. 249 Id. art. 34. 250 Id. art. 37(a). 251 Id. art. 37(b). 252 Id. art. 29. 253 MSM, History, http://www.msm.gov.om/pages/default.aspx?c=100. 254 Administrative Decision 1/2003 of the Capital Market Authority on the Conditions for Listing in MSM art. 8. 255 Id. arts. 10.1, 10.2. 256 Id. art. 10.3. 257 Id. art. 10.4. 258 Id. art. 4(b). 259 Id. art. 11. 260 Id. art. 12. 261 Id. art. 3.1. 262 Id. art. 3.2. 263 Id. art. 3.3. 264 Id. art. 3.4. 265 Id. art. 3.5. 266 Id. art. 4(a).1. 267 Id. art. 4(a).2. 268 Id. art. 4(a).3. 269 Id. 270 Id. 271 Id. 272 Id. art. 4(a).5. 273 Id. art. 4(a).4. 274 Id. 275 Id. 276 Id. 277 Id. art. 7. 278 Id. 279 Id. art. 17.


39

280 Id. art. 15. 281 BSE Resolution No. 13/1988 on the Issuance of Internal Regulation for the Bahrain Stock Exchange Article

38 (as amended) (hereinafter “BSE Internal Regulations”). 282 Id. art. 39. 283 Id. 284 Id. art. 54. 285 Id. art. 39. 286 BSE Resolution No. 6/1996 General Rules for Listing Foreign Companies at the Bahrain Stock Exchange §§

2, 6 (hereinafter “BSE Listing of Foreign Companies”). 287 Id. 288 Id. §§ 1-9. 289 BSE Internal Regulations art. 54. 290 BSE Listing of Foreign Companies § 4. 291 BSE, Requirements, http://www.bahrainstock.com/bahrainstock/bse/requirements.html. 292 BSE Internal Regulations app. Information Required for Listing on the Bahrain Stock Exchange. 293 Bahrain Monetary Agency, Disclosure Standards ch. I (2003) (as amended) (hereinafter “CBB Disclosure

Standards”). Note that prospectuses, or offering documents, are required when securities are offered or marketed in Bahrain and are a requirement of the CBB rather than a listing requirement.

294 BSE Internal Regulations art. 39. 295 Id. 296 Id. 297 Id. 298 Id. app. (1) Joint Stock Companies Listing Agreement. 299 Id. app. (1) Joint Stock Companies Listing Agreement. 300 Id. art. 43. 301 Id. art. 54. 302 CBB Disclosure Standards intro. 303 Id. art. 42. 304 Id. 305 Id. art. 52. 306 Id. art. 32. 307 Id. art. 33. 308 Id. art. 34. 309 Id. art. 35. 310 Id. art. 36. 311 Id. art. 37. 312 Id. art. 39. 313 Id. 314 Id.


40

315 Id. 316 Id. 317 Id. art. 40. 318 Id. art. 41. 319 Id. arts. 54, 55. 320 BSE Internal Regulations arts. 41, 42. 321 The KSE is governed by several laws and regulated by several regulatory authorities. The Decree enacted on

14 August 1983, regulating the Stock Exchange Market of Kuwait, and its executive regulations provide the main legislative framework governing the KSE and set the functions of the Market Committee and the KSE.

322 KSE Market Committee Decision No. 1 of 2007 (hereinafter “KSE Listing Rules for Official Market”); KSE Market Committee Decision No. 2 of 2007 (hereinafter “KSE Listing Rules for Parallel Market”).

323 KSE Listing Rules for Official Market art. (13); KSE Listing Rules for Parallel Market art. (13). 324 KSE Listing Rules for Official Market art. (14); KSE Listing Rules for Parallel Market art. (14). 325 KSE Listing Rules for Official Market art. (8); KSE Listing Rules for Parallel Market art. (11). 326 KSE Listing Rules for Official Market art. (11); KSE Listing Rules for Parallel Market art. (8). 327 KSE Listing Rules for Official Market art. (12); KSE Listing Rules for Parallel Market art. (12). 328 KSE Listing Rules for Official Market art. (12); KSE Listing Rules for Parallel Market art. (12). 329 KSE Listing Rules for Official Market art. (9); KSE Listing Rules for Parallel Market art. (9). 330 KSE Market Committee Decision No. 2 of 2008 art. (2). 331 Id. art. (4). 332 KSE Listing Rules for Official Market arts. (5), (6). 333 Id. 334 Id. art. (7). 335 KSE Market Committee Decision No. 2 of 2008 art. (12). 336 KSE Listing Rules for Parallel Market art. (2). 337 Id. art. (2). 338 Id. art. (4). 339 Id. art. (3). 340 Id. arts. (6), (7). 341 Id. art. (5). 342 KSE Market Committee Decision No. 4 for the Year 2007 art. (3). 343 Id. art. (3). 344 Id. art. (3). 345 KSE Listing Rules for Official Market art. (10); KSE Listing Rules for Parallel Market art. (10). 346 KSE Listing Rules for Official Market art. (13); KSE Listing Rules for Parallel Market art. (13). 347 KSE Market Committee Decision No. 3 of 2007 art. (1). 348 KSE Market Committee Decision No. 4 of 2007 art. (1). 349 Law No. 2 of 1999 Regarding the Disclosure of Interests in Joint Stock Companies (as amended); KSE

Market Committee Decision No. 5 of 1999 Regularising Disclosure of Interests in Joint Stock Companies.


41

350 KSE Market Committee Decision No. 1 of 2008; KSE Market Committee Decision No. 2 of 2008. 351 KSE Market Committee Decision No. 1 of 2008 art. 1. 352 Id. art. 2. 353 KSE Market Committee Decision No. 2 of 2008.

Abu DhabiBarcelonaBrusselsChicagoDohaDubaiFrankfurtHamburgHong KongLondon

Los AngelesMadridMilanMoscowMunichNew JerseyNew YorkNorthern VirginiaOrange CountyParis

RomeSan DiegoSan FranciscoShanghaiSilicon ValleySingaporeTokyoWashington, D.C.

www.lw.com