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Let's talk antitrust: Discussing recent cases and emerging competition issues
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Developments and market trends in the Middle East
Global | Publication | March 2016
Before 2012, the offer of units in a foreign fund to a limited number of known sophisticated investors in the UAE was tolerated without triggering any licensing and registration requirements with the UAE Central Bank, as there were no formal regulations governing this practice. However, the position changed significantly in 2012 when new regulations were introduced which transferred regulatory responsibility for the licensing and marketing of investment funds from the UAE Central Bank to the UAE Securities and Commodities Authority (SCA).
Importantly, the SCA passed board of directors’ decision number 37 of 2012 regarding the regulation of investment funds in the UAE (Decision), which specifically covers the marketing, offer and distribution (Promotion) of units, shares or interests in funds (Units) (including foreign funds) in the UAE. The Decision, which represented a significant departure from the regime of tolerated practices, was published in the UAE’s official gazette on August 26, 2012 and came into force on August 27, 2012. A further important development occurred on March 13, 2013, when the SCA passed its board of directors’ decision number 13 of 2013 amending the Decision (Amendment) by introducing certain exemptions to which the Decision would not apply. In addition, the SCA also published the Reverse Enquiry Declaration on its website which provided clarification on the sale of units of a foreign fund as a result of reverse solicitation by UAE resident investors. The following year the SCA provided some much anticipated clarification on the practical application of the Amendment. For the remainder of this article the Decision and the Amendment are together referred as the “Regulations”.
Under the Regulations, subject to a few limited exemptions (including the Promotion of Units in a foreign fund to sovereign wealth funds), the SCA prohibits the onshore Promotion of Units on a private placement basis: (a) unless the foreign fund has been approved by the SCA; and (b) the Units are marketed/offered onshore in the UAE by an entity licensed by the competent authorities in the UAE.
Outside of the exemptions set out in the Amendment, there is no tolerated private placement regime whereby a promoter/offeror does not need to seek the approval of SCA for the Promotion of Units in a foreign fund to a limited number of sophisticated/institutional investors onshore in the UAE.
The Regulations also include provisions in relation to the following:
More recently there have been further developments. On November 20, 2015, the SCA published on its website proposed amendments to the Regulations for public consultation. According to the SCA’s website, these proposed amendments are subject to a final sign off by the SCA’s board of directors and may, therefore, be partially or wholly rejected. The SCA has confirmed that until such time as any such amendments come into effect, the Regulations shall continue to apply. The proposed amendments published on the SCA’s website are very general in nature and contain only one specific change/addition (which is unclear as currently drafted but appears to introduce a further exemption) to the current Regulations in respect of the Promotion of foreign funds onshore in the UAE. We understand, from informal discussions we have had with a senior official at the SCA, that there may be further proposed amendments in relation to the Promotion of foreign funds onshore in the UAE. It is still not known what the nature of these changes may be or when any such further amendments may be proposed.
Video
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Publication
After a lacklustre finish to 2022 when compared to the vintage year for M&A that was 2021, dealmakers expected 2023 to see the market continue to cool in most sectors, in response to the economic headwinds of rising inflation (with its corresponding impact on financing costs), declining market valuations, tightening regulatory scrutiny and increasing geopolitical tensions.
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On 18 September 2023, the CMA published its Initial Report (Initial Report) on AI Foundation Models (FM), supplemented in April 2024 with the publication of its “Update Paper” focused on potential antitrust risks associated with FMs and a “Technical Update Report” providing more detail on the development on FMs (collectively the “Reports”). Below, we consider these CMA publications.
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