In a Webinar for Free Zone Companies, it was showcased the advancements in regulations that benefit many businesses. It was held with the aim to provide an analysis regarding the amendments made to the current regulation.
In this article, you’re going to learn everything you need to know about the latest updates that allow free zone companies to access to listing opportunities. In addition, you’re going to learn why this is a smart decision and how it can benefit the economy. Let’s observe:
- IPO and listing opportunities discussed in the Webinar for Free Zone Companies
- How can free zone companies offer shares for subscription?
- Which changes were made to the current regulations?
- What is the impact of this amendment to the current regulation?
- What is Initial Public Offerings (IPO)?
- Which conditions must free zone companies comply to offer shares?
- Why do these changes may attract foreign investors?
- How can Connect FZ help you with your listing opportunities?
1. IPO and listing opportunities discussed in the Webinar for Free Zone Companies
As stated in the Webinar for Free Zone Companies, many business owners now have the opportunity of participating in the IPO. This is a great decision that is going to benefit the UAE’s economy. In addition, it can attract foreign investors and boost operations of existing companies.
As part of the strategic goals that are a crucial part of the Dubai 10X Initiative, the free zone companies will now have access to the main markets. It could mean an outstanding improvement of the economy and it’s great news for free zone business owners.
1.1 Who participated in the webinar?
This webinar gave excellent clarification about the latest changes that could benefit free zone companies. Several experts and specialists of the leading economic sector participated, and among them were the following:
- Amna Lootah, Assistant Director General, DAFZA
- Hassan Al Serkal, CEO of DFM
- Hamed Ali, CEO of Nasdaq Dubai and Deputy CEO of DFM
It was organized with the aim to provide clarification on several aspects regarding the listing opportunities to free zone companies.
As pointed out in the Webinar for Free Zone Companies, they are now available to offer shares. It was not allowed before, but thanks to the latest changes it’s now a possibility.
Now, free zones companies are allowed to participate in offerings and listings. Previously, only limited companies had access to this option. It means that foreign and free zone companies had many limitations. These long-standing limitations are now removed and it’s allowed the ownership of UAE “onshore” companies.
2.1 What are the main markets for free zone companies?
There are two main markets that free zone companies can now use for listing opportunities. These are the following:
- Dubai Financial Market (DFM)
- Nasdaq Dubai Growth Market
Thanks to the latest amendment now free zone companies can have access to these two markets. This means that any business can now participate in IPOs and fulfill their goals of expansion.
Learn more about how to register a company in Dubai Free Zone.
2.2 Which companies can now participate in the DFM?
This move is perfect for small and medium-sized companies (SMEs) since they are now able to access to investors. But, this doesn’t benefit only SMEs since larger companies can also benefit from this.
So, businesses that are now formed in free zones can start expanding and growing thanks to this initiative by being part of the Free zone company list in Dubai.
3. Which changes were made to the current regulations?
The UAE Securities and Commodities Authority (SCA) issued the new resolution with the changes to the existing regulation. This was an important topic in the Webinar for Free Zone Companies.
The SCA Resolution No. 25 of 2020 includes several changes, which are the following:
- Invitation to subscribe shares of a Free Zone Company or Foreign Company
- The term “Free Zone Company” refers to companies organized in a free zone area and it wasn’t included before
- Companies established in the DIFC and ADGM can offer their shares
- Free Zone Companies can offer their shares for public in Onshore UAE
These are important changes because it allows business owners to gain access to diversified investment opportunities. Although the regulatory framework is comprehensive, the companies can reinforce their growth thanks to IPO.
Learn more about the types of company formation available in AMCFZ.
4. What is the impact of this amendment to the current regulation?
In the Webinar for Free Zone Companies it’s also important to note that this move has a positive impact. It allows businesses to raise sufficient capital to carry out and develop their projects in this place. Before, free zone companies had to look for capital by going back to their country of origin but this new possibility opens up the chances of growing within their current region.
Some of the benefits that free zone companies can obtain are the following:
- Attract the attention of more potential new investors
- Access to investment opportunities that otherwise weren’t available for them
- Obtain revenue that allows them to expand the business
- Access to unique IPO and listing opportunities
- Enhance their image and become more attractive in global markets
- Access to trading systems that allows them to grow
- It facilitates growth and expansion thanks to investment
- Have more knowledge and technologies available to expand
- Allows them to go through rapid transformation when needed
Listed companies will receive all of these benefits thanks to this new regulation. It’s a great way of boosting productivity of businesses that were severely impacted by the pandemic. It’s known that the UAE is a place that attracts foreign investors and once they see all of these benefits they’re going to feel confident when making their expansion to this country.
Learn more about the reasons why retail business owners boosted their sales even during the pandemic.
4.1 What is the impact for Dubai’s economy?
SMEs and larger companies are not the only ones that receive benefits from this new regulation. Dubai’s economy has been damaged in the past year because of the lockdown and now this measure aims to make a positive impact.
DMF and Nasdaq Dubai are willing to support businesses across all industries to continue reinforcing the economic hub image of this place. Dubai is well-known as an attractive infrastructure for investors, and the goal is to keep it this way.
Some of the benefits for the region are the following:
- Reinforce the local and regional market
- Attract the international market
- Safeguard the investment environment
- Give flexibility and support to investors that want to enter the Dubai market
- Support the existing free zone business community
5. What is Initial Public Offerings (IPO)?
A crucial aspect in the Webinar for Free Zone Companies was related with the IPOs. Therefore, it’s important to define it to know exactly what it is.
When we talk about IPO we refer to the process where a business create new shares and then sold to the public. However, an intermediary carries out the underwriting of the company’s shares first. This intermediary is the underwriter and they’re in charge of carrying out several tasks such as deciding the offer price of the shares.
It means that businesses that want to be part of the UAE Free Zone companies list can do it by the IPO. There are also other methods for listing, but this is the most advisable for businesses. It represents an outstanding opportunity for Free Zone Companies that want to continue growing.
Learn more about the business license process and detail in Ajman.
The requirements and conditions for being part of the UAE Free Zone companies list was anoher topic addressed in the Webinar for Free Zone Companies.
As many people know, each free zone has its own laws and rules. Therefore, before reviewing the conditions it’s important to point out to which specific market we’re referring to. It’s also important to state that the company must pay the established listing fees when submit the application.
6.1 Nasdaq Dubai
All company owners are able to choose their share price and participate in an IPO. The stock exchange in this market allows business to fuel their growth. Hence, it’s a great benefit for companies in all sectors.
In addition, it’s important to note that Nasdaq Dubai not only welcomes free zone companies but also foreign companies located in any place of the world. And, it also encourages SMEs to invest since the minimum capital is lower than the established by the DFM.
Some of the conditions are the following:
- Capital: minimum of USD10 million
- It should list at least 25% of its shares
- The shares must be freely transferable and fully paid
- It should be a duly incorporated entity in home jurisdiction
- The company must have 3 years of audited financial statements
If the company has interest in listing in Nasdaq Dubai, it’s necessary to prepare the “Prospectus.” This is a formal document where they offer their shares. It has to preapare it in accordance with the indications and then it must be published.
6.2 DFM
Any company established in any Emirate can list their shares in the DFM, including those organized in financial free zones. It’s worth noting that the business should be a public joint stock company or equivalent. Some of the requirements are the following:
- Capital: the paid-up capital should not be less than AED20 million
- The company must offer not more than 70% of the shares and not less than 25% of the company’s capital
- Net profits: the company must have achieved it in the last two fiscal years.
- Company’s shareholders: it must not be less than 100. In addition each shareholder must hold at least 100 shares if the company lists in a foreign market.
- The offer can be by public subscription or by book building process
- It must have sufficient capital to operate for 12 months following the listing of shares
These are some of the most relevant conditions since there are 11 in total that the company must fulfill before listing. In addition, the company must submit the listing application and this will be reviewed.
Learn more about why Dubai is a great place for making business in the UAE.
7. Why do these changes may attract foreign investors?
Foreign investors may feel attracted to invest in the UAE thanks to the Free zone company list in Dubai.
Free zones offer 100% ownership of the business to foreign investors but the negative aspect was that they weren’t able to offer their shares. With this change, it’s now possible so their interest is going to boonce again.
The UAE is a top destination for foreign investors and with this amendment the goal is to facilitate their access to the financial market. In addition, it also makes them available to options to expand their business. It’s great news for those that are looking for raising capital.
Learn more about the main differences between free zone and mainland company.
8. How can Connect FZ help you with your listing opportunities?
Owning a company in one of the free zones in the UAE could be a daunting process. However, as you can see there are many benefits. It’s even better with the fact that you can now go public and obtain more capital for your business.
Here in Connect FZ we want to help you establish your business in one of the available free zones. Hence, you can fulfill your expansion goals and start boosting your operations. Our team of specialists is readily available to help you solve all of your inquiries.
Would you like to contact Connect Free Zone to help you set up your company in the UAE? You can call at +971 433 166 88 or send an email to contact@connectfz.ae , and you’ll talk to one of their representatives that will gladly answer all of your questions.