Debt Securities Issuer Compliance

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Questions and Answers

What must the issuer obtain to issue debt securities if it is a joint-stock company?

Approval from the general assembly (correct)

Approval from the regulatory board

Approval from the financial committee

Approval from the Authority only

What is the minimum aggregate value of debt securities that must be listed, unless otherwise decided by the Authority?

AED 20 million or equivalent

AED 10 million or equivalent (correct)

AED 5 million or equivalent

AED 15 million or equivalent

What type of company must the issuer be to issue debt securities into the primary market?

Private liability company

Joint-stock company incorporated in the State (correct)

Any type of corporation

Non-profit organization

Which document must be prepared and submitted for approval when issuing debt securities?

A prospectus Signup and view all the answers

What obligation must be fulfilled concerning secured debt securities?

A trustee must be appointed Signup and view all the answers

Which entity must approve the debt securities issuance programme?

The authority Signup and view all the answers

What role must the independent representative play for debt securities holders?

Represent the debt securities holders and protect their interests Signup and view all the answers

What must be included in the prospectus if the debt securities are convertible?

Details of the conversion procedure and terms Signup and view all the answers

What is the minimum nominal value for Sukuk that must be issued and listed?

AED 10 million Signup and view all the answers

Which entities are exempt from the requirement of advertisement approval by the Authority?

Government entities Signup and view all the answers

What must an obligor do upon discovering material information that is not public knowledge?

Inform the Authority and the market immediately Signup and view all the answers

How long does an obligor have to submit audited annual financial statements to the Authority and the market?

180 days Signup and view all the answers

What is required of an obligor regarding the maintenance of a paying agent?

It must maintain a paying agent until redemption Signup and view all the answers

Which event must be reported to the Authority and the market without delay?

Passing of a resolution for winding up Signup and view all the answers

What must be announced immediately by the obligor concerning changes in the retail Sukuk?

Changes in the terms and conditions of the retail Sukuk. Signup and view all the answers

What standard must audited annual financial statements comply with?

International auditing standards Signup and view all the answers

Which of the following activities is not a continuing obligation for an obligor?

Providing unsolicited financial advice Signup and view all the answers

Which event does NOT require immediate announcement to the Authority regarding retail Sukuk?

Regular profit payment announcements. Signup and view all the answers

Which of the following is a continuing obligation of the obligor towards retail Sukuk holders?

Notifying the Authority of any changes to the board of directors. Signup and view all the answers

What must an obligor do regarding any decision not to pay profit payments on retail Sukuk?

Notify the Authority and publish the decision on its website. Signup and view all the answers

Which action must NOT be taken without the approval of the board of directors or managers by the obligor?

Amending constitutional documents affecting retail Sukuk holders. Signup and view all the answers

What is required when the obligor changes the nature of its business activities?

Notification if the change may negatively affect retail Sukuk holders. Signup and view all the answers

What is one of the obligations of the obligor after appointing a new trustee?

Announcing the appointment to the market and Authority. Signup and view all the answers

Which event involves immediate notification to the Authority in relation to the retail Sukuk?

Issuing new securities by the obligor. Signup and view all the answers

Which administrative penalty could involve restricting the activity of a violator?

Constraining board member powers Signup and view all the answers

What is the maximum fine that can be imposed for violations related to money laundering and terrorism financing?

AED 5,000,000 Signup and view all the answers

Which of the following is NOT a potential outcome for managers responsible for violations?

Regular appearance before a court Signup and view all the answers

What is the potential imprisonment term for someone convicted of money laundering?

Ten years Signup and view all the answers

What is the minimum fine for a person convicted of money laundering?

AED 100,000 Signup and view all the answers

Which action could be taken against a violator's license?

Revoking the license entirely Signup and view all the answers

What is one of the reasons someone may receive harsher penalties for money laundering?

Non-profit organization involvement Signup and view all the answers

Which of the following crimes might lead to a criminal penalty described in the content?

Money laundering Signup and view all the answers

What is the maximum fine for individuals convicted of money laundering crimes?

AED 10,000,000 Signup and view all the answers

Which penalty is imposed on individuals using funds for terrorist financing?

Life imprisonment or temporary imprisonment of no less than ten years Signup and view all the answers

What is the minimum fine for a legal person convicted of money laundering?

AED 500,000 Signup and view all the answers

What can happen to a legal person convicted of financing terrorism?

The court may order their dissolution. Signup and view all the answers

Which of the following is a measure that can lead to a commutation or exemption of a sentence for offenders?

Providing information that aids in prosecution Signup and view all the answers

What is the range of fines for a legal person found guilty of financing illegal organizations?

AED 500,000 - AED 50,000,000 Signup and view all the answers

What does the term 'repeat offender' imply regarding penalties for money laundering?

They may face increased penalties. Signup and view all the answers

What consequence may follow if a legal person is found guilty of financing terrorism?

Their offices may have to cease operations. Signup and view all the answers

What is the penalty for failing to report suspicions regarding transactions?

A fine no less than AED 100,000 and no more than AED 1,000,000 or imprisonment Signup and view all the answers

What constitutes the offence of 'tipping off'?

Alerting a person that they are under investigation for a suspicious transaction Signup and view all the answers

Which of the following actions could be deemed a violation of market abuse regulations?

Conducting a series of transactions to mislead about market activity Signup and view all the answers

What is the minimum fine for engaging in deceptive practices regarding market abuse?

AED 100,000 Signup and view all the answers

If a person knowingly provides false information affecting market value, what could be the consequence?

Imprisonment between three months and three years or a fine of AED 100,000 to AED 1 million Signup and view all the answers

What is the maximum imprisonment term for tipping off an individual regarding a suspicious transaction?

Three years Signup and view all the answers

What is one aspect that Article 16 of the UAE regulations addresses?

Intentionally deceiving other parties in securities transactions Signup and view all the answers

What action must be taken if a financial operator suspects suspicious activity?

Report the suspicion to the relevant authorities Signup and view all the answers

Study Notes

Listing Debt Securities - Issuer

Issuers of debt securities must comply with their constitutional documents and these documents must not restrict the issuer from fulfilling obligations related to the issuing and listing of debt securities.
Joint-stock companies issuing debt securities into the primary market must be incorporated in the State and outside a financial free zone.
The following conditions must be met for a primary listing of debt securities:
- Joint-stock companies must obtain approval from their general assembly.
- A prospectus must be prepared and submitted for approval by the Authority.
- A prospectus for convertible debt securities must detail the conversion procedure and terms.
- The issuance, listing, and offering of debt securities can be done through a debt securities issuance program approved by the Authority.
- A paying agent must be appointed within the State.
- Joint-stock companies must sign an agreement with an independent representative to safeguard the rights and interests of debt security holders. This can be the trustee for secured debt securities or the paying agent.

Listing Debt Securities - Conditions

Debt securities must comply with the Commercial Companies Law and the issuer's constitutional documents.
The aggregate value of the listed debt securities must be at least AED 10 million or the equivalent in a foreign currency unless the Authority decides otherwise.
When listed debt securities are secured, a trustee must be appointed to represent the interests of the holders and have access to information related to the assets.

Listing Debt Securities - Continuing Obligations

Issuers of debt securities must provide the Authority with all necessary information to protect investors and any other information requested to ensure compliance with regulations.
Issuers of retail Sukuk must:
- Announce the following immediately to the Authority and the market:
  - Issuance of any block of shares or a new program by the obligor.
  - Changes in the terms and conditions of the retail Sukuk.
  - Redemption or cancellation of the retail Sukuk.
  - Appointment or replacement of the trustee or paying agent.
  - Any default event impacting the issuance and listing of the retail Sukuk.
  - Any event requiring immediate notification of the trustee per the trust agreement.
- Send the Authority and the market copies of all correspondence pertaining to the retail Sukuk holders, including information or documentation about meetings.
- Report the following events to the the Authority and the market as soon as they become aware of them. The obligor must also publish these on their website with board approval:
  - Any decision to not pay profit payments for any of the obligor's retail Sukuk.
  - Any proposal to issue new securities by the obligor, including any guarantee or warranty related to the new issuance.
  - Amendments to the obligor's constitutional documents which may materially affect retail Sukuk holders.
  - Proposed changes to the obligor's share capital that may materially affect retail Sukuk holders.
  - Decisions to change the nature of the obligor's activities or business if the change may negatively and materially affect retail Sukuk holders.
  - Changes to the composition of the obligor's board of directors or managers.
  - Termination of any period of time that causes the winding up of the issuer, obligor, obligor's holding company, or any subsidiaries.
The total nominal value of Sukuk to be issued and listed must not be less than AED 10 million or its equivalent in a foreign currency unless the Authority decides otherwise.

All advertisements related to Sukuk admitted to listing must be approved by the Authority before publication except for those issued by government entities.

Continuing Obligations for Sukuk

For a primary listing of Sukuk, the obligor must:
- Immediately notify the Authority and the market of any new developments or information not publicly known and which may materially affect market activity, the price of the listed Sukuk, or the ability of the obligor or issuer to meet their commitments. The obligor must publish these developments on their website in Arabic and English after receiving approval from the Authority.
- Maintain a paying agent in the UAE until the Sukuk are redeemed. The obligor must notify the Authority and the market upon any change in paying agents.
- Inform the Authority and the market about the following events as soon as they become aware of them and publish the details on their website:
  - Presentation of winding-up petitions or appointment of provisional liquidators for the issuer, obligor, obligor's holding company, or any subsidiaries.
  - Resolutions by the issuer, obligor, obligor's holding company, or any major subsidiaries to wind up or dissolve operations.
  - Termination or suspension of activities for any period of time that may cause the winding up of the issuer, obligor, obligor's holding company, or any subsidiaries.
- Submit audited annual financial statements to the Authority and the market within 180 days of the end of the fiscal year. These statements must be prepared according to international auditing standards.
- Pay specified annual fees to the Authority and the market.

Administrative Penalties for Financial Institutions

Failing to comply with AML regulations, including money laundering and terrorist financing laws, can result in administrative penalties for financial institutions and designated non-financial businesses.
Penalties include warnings, bans on working in the sector related to the violation, constraining the powers of board members, and arrest or temporary imprisonment for those responsible for the violation.
The supervisory authority can also cancel the violator's license and publish the penalties.

Money Laundering Penalties

Individuals convicted of money laundering face imprisonment of up to 10 years and a fine of up to AED 5,000,000.
Increased penalties of temporary imprisonment and a fine of up to AED 10,000,000 are imposed on individuals who abuse their influence or professional status, commit the crime through a non-profit organisation, or are repeat offenders.
Attempting to commit money laundering is punishable by the same penalty as actually committing the crime.

Terrorist Financing Penalties

Terrorist financing carries a severe penalty of life imprisonment or a minimum of ten years and a fine of up to AED 10,000,000.
Financing illegal organizations results in temporary imprisonment and a fine of at least AED 300,000.
Offenders may be granted leniency if they provide information that leads to the disclosure, prosecution, or arrest of perpetrators.

Penalties for Legal Persons

Legal persons convicted of money laundering, financing terrorism, or financing illegal organizations can face fines between AED 500,000 and AED 50,000,000.
Additionally, legal persons found guilty of financing terrorism can be dissolved and have their offices closed.
The judgment summary must be published at the guilty party's expense.

Failure to Report Suspicions

Failing to report suspicious transactions or negligence in implementing suspicion reporting procedures can lead to imprisonment and/or a fine of up to AED 1,000,000.

Tipping Off

'Tipping Off' occurs when an individual notifies or warns a person about suspicious transactions under review.
Tipping off is an offense punishable by imprisonment of at least six months and/or a fine of up to AED 500,000.

Market Abuse Penalties

Article 16 prohibits dealing in securities with the intention to deceive other parties and deems illusory transactions aimed at manipulating market perception as deceptive.
Article 37 outlines penalties for market abuse, including imprisonment of up to three years and fines of up to AED 1,000,000 for providing false information that affects market value or investor decisions.

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Description

This quiz covers the requirements for issuers of debt securities, focusing on compliance with constitutional documents and the conditions for primary listing. Participants will learn about the approval process, prospectus details, and necessary agreements for joint-stock companies. Test your knowledge on the regulations governing the issuance and listing of debt securities.