Chapter One: Regulatory Infrastructure

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Questions and Answers

What is a key responsibility of the market's board of directors?

Establishing specialist technical organs for trading and settlement (correct)

Handling public relations for the market

Determining the fees charged by the SCA

Supervising all broker activities directly

Which entities are required to have membership in the market?

Only joint-stock companies with listed securities

Only brokers licensed under the law

Brokers, joint-stock companies, and any other entities with listed securities (correct)

Any broker, regardless of licensing

What is the function of the General Assembly of the market?

To negotiate terms with the SCA regarding regulations

To monitor general market conditions and suggest improvements (correct)

To directly resolve disputes between members

To establish trading fees for securities

How soon must the SCA be notified of a new market member's entry on the membership register?

Within one week Signup and view all the answers

Which of the following is NOT one of the responsibilities of the board of directors?

Directly managing all trading operations Signup and view all the answers

What role does the SCA play in the meetings of the General Assembly?

An observer attending the meetings Signup and view all the answers

What is required before a market can include a new member in its register?

Notification sent to the SCA Signup and view all the answers

Which of the following tasks can the board of directors delegate?

Most operational tasks related to market functionality Signup and view all the answers

What is the primary responsibility towards regulators described in the content?

To be open and cooperative with all regulators Signup and view all the answers

What should be done if one is not competent in a certain area of work?

Decline to act unless access to competent advice is available Signup and view all the answers

Which value emphasizes the need for collaboration among market participants?

Partnerships and Cooperation Signup and view all the answers

What aspect of conduct is highlighted in relation to market partners?

Respect for all counterparties and business partners Signup and view all the answers

How can individuals promote a safe environment for communities?

By speaking up and encouraging open communication Signup and view all the answers

What is emphasized under the principle of 'Respect Others and the Environment'?

Supporting diversity and inclusion in the workplace Signup and view all the answers

What does Continuous Professional Development (CPD) focus on?

Striving for professional excellence and supporting others' development Signup and view all the answers

Which value from the SCA promotes a culture of honesty and ethical conduct?

Fairness and Integrity Signup and view all the answers

What is the role of the SCA in relation to market transparency?

To ensure transparency and disclosure as per the Law Signup and view all the answers

Who prepares the annual budget for the SCA?

The chief executive of the SCA Signup and view all the answers

What does the SCA's income consist of?

Annual funds, listing and trading fees, and fines Signup and view all the answers

How often does the SCA board report on market activities to the Cabinet of Ministers?

Every six months Signup and view all the answers

Who appoints the chief executive and deputy of the SCA?

The federal decree based on board proposals Signup and view all the answers

Which of the following is NOT a source of income for the SCA?

Annual funds from private investors Signup and view all the answers

What ensures the SCA's financial position is accurately reflected?

Regular books of account maintenance Signup and view all the answers

What is the rank of the chief executive of the SCA?

Undersecretary Signup and view all the answers

What is the role of the chairman regarding the board meetings?

To preside over the meetings and direct the discussion. Signup and view all the answers

How often must the board convene according to the outlined procedures?

At least once every two months. Signup and view all the answers

Who can take the place of the chairman when they are absent?

The deputy chairman. Signup and view all the answers

What is required for a meeting of the board to be valid?

A majority of members must attend, including the chairman or deputy. Signup and view all the answers

What happens in the case of an equal vote during a resolution?

The chairman or their deputy casts a deciding vote. Signup and view all the answers

What is NOT permitted during voting in board meetings?

Voting by proxy. Signup and view all the answers

What authority does the board have regarding committees?

The board may form permanent or interim committees. Signup and view all the answers

In exceptional cases requiring quick decisions, who may take the requisite decision?

The chairman. Signup and view all the answers

Which of the following is a source of financing for the markets?

Fines levied on brokers or companies Signup and view all the answers

What must happen to transactions in listed securities not recorded according to market provisions?

They are classified as null and void Signup and view all the answers

Under Federal Law No. 4, what is required for the transfer of ownership of securities?

Timely execution by the issuer of securities Signup and view all the answers

What action can the market’s board take in exceptional circumstances?

Suspend trading with majority board presence Signup and view all the answers

What must be displayed according to the market’s regulations?

Securities and commodities prices Signup and view all the answers

What is a requirement for suspending or reinstating rules or regulations in the market?

Majority of the board must be present Signup and view all the answers

Which of the following is NOT a part of the supervisory components outlined in Federal Law No. 4?

Ownership verification process Signup and view all the answers

What can the SCA board impose as a consequence for market failures?

Sanctions on the market Signup and view all the answers

What defines a related party in a corporate governance context?

Individuals holding 30% or more of the company's capital, board members, and senior executive management Signup and view all the answers

What is the threshold amount for transactions that require general assembly approval?

Transactions that meet or exceed 5% of the company's capital Signup and view all the answers

Who must not participate in voting on transactions involving related parties?

The related party interested in the transaction Signup and view all the answers

What must happen if there is a significant change to the terms of an approved transaction?

Another approval must be obtained from the board or general assembly Signup and view all the answers

Who evaluates transactions exceeding 5% of the issued capital?

An assessor accredited by the SCA Signup and view all the answers

Which of the following is NOT considered a related party transaction?

Transactions that fall under the company's normal business operations Signup and view all the answers

What can happen to a related party or board member if improper transactions occur?

They may be liable for damages to the company Signup and view all the answers

What is the role of board consent in transactions with related parties under 5% of the company’s capital?

Board consent is required for any transaction without exception Signup and view all the answers

Study Notes

Chapter One: The Regulatory Infrastructure

This chapter introduces the regulatory infrastructure established by Federal Law No. 4 of 2000.
It covers the Securities & Commodities Authority (SCA)'s functions and powers.
The requirements relating to membership in the securities and commodities markets in the UAE are outlined.
Corporate governance, and the Chartered Institute for Securities & Investment's (CISI) Code of Conduct are briefly considered.
Categories of licensing provided to firms by the SCA are addressed.
Approximately 11 examination questions cover this syllabus area.

Federal Law No 4 of 2000

The SCA was established by Federal Law No. 4 of 2000.
The SCA is a separate legal authority within Abu Dhabi.
The SCA has financial and administrative independence.
It reports to the UAE Cabinet of Ministers.

The Securities & Commodities Authority (SCA)

The SCA's objective is to provide opportunities to invest savings and funds in securities and commodities.
This ensures national economic interest, integrity, and accuracy of transactions.
It ensures price determination by supply and demand, investor protection.
Develops investment awareness, and ensures financial and economic stability.
The SCA is not allowed to conduct commercial activities or own securities.
The SCA has the power to regulate the functioning of the SCA, markets' licensing and monitoring, and the accepting, listing and cancelling of trading securities/commodities.
In consultative collaboration with licensed markets within the State. create regulations for the functioning of markets, trading, clearance, settlement, transfers of ownership, market membership, disclosure, transparency, and arbitration procedures.

SCA Resolutions

Regulations concerning securities and commodities markets are covered (detailed in the article or file).
Details include establishment, management, membership, trading, and finances.

Corporate Governance

Corporate governance is the set of rules for running companies, promoting principles of responsibility, accountability, fairness, transparency, and ensuring the protection of shareholders’ rights and other stakeholders' interests. -This involves managing relationships between management, board, shareholders and stakeholders regarding company objectives.
Includes the creation of clear responsibilities and obligations for directors and executives in managing the company.,

Codes of Conduct

The CISI (Chartered Institute for Securities & Investment) has its own code of conduct, based on standards and principles that members of the CISI are expected to meet.

License Categories and Requirements

Five categories of financial activities are defined by the SCA, each with specific requirements like capital requirements and functions
The SCA requires regulatory approval for certain roles within the firm.

Accounting System Controls

Specific technical conditions for accounting systems are specified (detailed in page)
Including password systems/access control, data/record-keeping/storage, and reporting requirements are also included (see page for full details)

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Description

This quiz covers Chapter One of the regulatory framework established by Federal Law No. 4 of 2000, focusing on the functions and powers of the Securities & Commodities Authority (SCA). It examines the membership requirements for securities and commodities markets in the UAE, corporate governance, and the licensing categories provided by the SCA. Test your knowledge with 11 examination questions related to this syllabus area.