Local banks must be 60% UAE-owned
The new Federal Law (Law No. 14) of 2018 regarding the Central Bank and Organisation of Financial Institutions and Activities requires a minimum of 60 per cent UAE ownership for local banks licensed to operate in the country.
The new Federal Law (Law No. 14) of 2018 regarding the Central Bank and Organisation of Financial Institutions and Activities requires a minimum of 60 per cent UAE ownership for local banks licenced to operate in the country.
Article 74 of the law requires all UAE banks to be formed as public jointstock companies. However, branches of foreign banks operating in the country are exempt from this requirement.
Other financial institutions are free to be formed as joint-stock companies or limited-liability companies, in accordance with the rules and conditions issued by the central bank’s board. Exchange houses and monetary intermediaries are allowed under sole proprietorship, or take any other legal form in accordance with the rules and conditions issued by the central bank’s board of directors.
Minimum requirements
While minimum capital requirements of all categories of financial institutions and banks will be decided by the central bank, from time to time the central bank’s board can increase or decrease capital requirements and is empowered to determine its risk-based capital requirements and the necessary actions to be taken in case of capital shortfall. ■ ■ ■ ■ ■ UAE banks should have a minimum of 60 per cent national shareholding.
All banks need to be public joint-stock companies except branches of foreign banks. Central Bank’s prior approval required for acquisition or sale of controlling stakes in a UAE bank.
Exchange houses’ ownership can be sole proprietorships. Expansion or contraction of bank branch network needs central bank approval.
While it will be a legal requirement to keep a minimum 60 per cent national shareholding of banks incorporated in the UAE, the central bank can decide on the conditions, controls for percentage of ownership of shares and shareholdings contribution in the capital of Other Financial Institutions incorporated in the State by nationals and foreigners.
Article 77 of the new law also requires licensed financial institutions to seek central bank approval for amendments to their Memorandum or Articles of Association.
Any such amendments will take effect only after they were entered into the register. The law has also empowered the central bank to reject the application. The central bank board of directors’ decision on such matters will be final.