REUTERS

DUBAI STOCK ownership rules in the United Arab Emirates have been overhauled to boost transparency in the Gulf Arab state’s two stock markets and lead to better disclosure during takeovers.

Enforcing the regulations will be the main challenge for the Securities and Commodities Authority, analysts said on Tuesday.

While the SCA did not say when the changes come into effect nor what penalties would apply to infractions, the new rules will require investors to tell the stock market if they intend to buy 30 percent of a UAE-listed company and call for detailed disclosure about ownership in listed companies.

“The board agreed ... to make adjustments to the disclosure and transparency system in order to develop the legislation governing the functioning of financial markets,” the SCA said.

The move came a month after Abu Dhabi state-owned firm Aabar Investments quietly accumulated a 20.8 percent-stake in Dubai contractor Arabtec Holding ARTC.DU from the market using different subsidiaries.

Aabar’s chairman - now also Arabtec’s chairman - was quoted by a local newspaper at the time as saying the fund had a 53 percent position. A stock market source told Reuters Aabar owned 53 percent of Arabtec.

The new rules require that an investor pool together all holdings in a specific company - whether held by family members, companies and affiliates - and inform the regulator if the combined ownership is above the five percent mark that normally triggers mandatory market disclosure.

“It definitely sounds great on paper but will it do enough to significantly change what is happening now? We will have to wait and see,” said a Dubai-based fund manager, speaking on condition of anonymity due to the sensitivity of the matter.

Under the guidelines, the SCA can reject transactions if it deems them to be against the interests of shareholders or the economy.