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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
General Module (GEN) [VER44/07-19]
GEN 11 Supervision
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
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Notices
Financial Markets Tribunal
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  • GEN 11.10 Notifications

    • GEN 11.10.1

      (1) This section applies to every Authorised PersonG , unless otherwise provided, with respect to the carrying on of Financial ServicesG and any other activities whether or not financial.
      (2) This section does not apply to a Representative OfficeG .

      • GEN 11.10.1 Guidance

        1. This chapter sets out RulesG on specific events, changes or circumstances that require notification to the DFSAG and outlines the process and requirements for notifications.
        2. The list of notifications outlined in this chapter is not exhaustive. Other areas of the RulebookG may also detail additional notification requirements.
        3. An Authorised PersonG and its auditor are also required under Article 67 to disclose to the DFSAG any matter which may indicate a breach or likely breach of, or a failure or likely failure to comply with, laws or RulesG . An Authorised PersonG is also required to establish and implement systems and procedures to enable its compliance and compliance by its auditor with notification requirements.

    • Core information

      • GEN 11.10.2

        An Authorised PersonG must provide the DFSAG with reasonable advance notice of a change in:

        (a) the Authorised Person'sG name;
        (b) any business or trading name under which the Authorised PersonG carries on a Financial ServiceG in or from the DIFCG ;
        (c) the address of the Authorised Person'sG principal place of business in the DIFCG ;
        (d) in the case of a BranchG , its registered office or head office address;
        (e) its legal structure; or
        (f) an Authorised Individual'sG name or any material matters relating to his fitness and propriety.

      • GEN 11.10.3

        A Domestic FirmG must provide the DFSAG with reasonable advance notice of the establishment or closure of a branch office anywhere in the world from which it carries on financial services.

      • GEN 11.10.4

        When giving notice under Rule 11.10.3 in relation to the establishment of a branch, a Domestic FirmG must at the same time submit to the DFSAG a detailed business plan in relation to the activities of the proposed branch.

      • GEN 11.10.5

        (1) The DFSAG may object to the establishment by a Domestic FirmG of a branch office elsewhere in the world.
        (2) If the DFSAG objects to the firm establishing a branch anywhere in the world the firm may not proceed with establishment of such a branch.
        (3) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under (1).
        (4) If the DFSAG decides to exercise its power under (1), the Domestic FirmG may refer the matter to the FMTG for review.
        Derived from Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM131/2014 (Made 21st August 2014). [VER34/06-14]

      • GEN 11.10.6 [Deleted]

        [Deleted] DFSA RM131/2014 (Made 21st August 2014). [VER34/06-14]

    • Regulatory impact

      • GEN 11.10.7

        An Authorised PersonG must advise the DFSAG immediately if it becomes aware, or has reasonable grounds to believe, that any of the following matters may have occurred or may be about to occur:

        (a) the Authorised Person'sG failure to satisfy the fit and proper requirements;
        (b) any matter which could have a significant adverse effect on the Authorised Person'sG reputation;
        (c) any matter in relation to the Authorised PersonG which could result in serious adverse financial consequences to the financial system or to other firms;
        (d) a significant breach of a RuleG by the Authorised PersonG or any of its Employees;
        (e) a breach by the Authorised PersonG or any of its EmployeesG of any requirement imposed by any applicable law by the Authorised PersonG or any of its EmployeesG ;
        (f) subject to Rule 11.10.8, any proposed restructuring, merger, acquisition, reorganisation or business expansion which could have a significant impact on the Authorised Person'sG risk profile or resources;
        (g) any significant failure in the Authorised Person'sG systems or controls, including a failure reported to the Authorised PersonG by the firm's auditor;
        (h) any action that would result in a material change in the capital adequacy or solvency of the Authorised FirmG ; or
        (i) non-compliance with RulesG due to an emergency outside the Authorised Person'sG control and the steps being taken by the Authorised PersonG .

    • Major acquisitions

      • GEN 11.10.8

        (1) Subject to (2), an Authorised FirmG which makes or proposes to make a Major AcquisitionG as defined in (3) must:
        (a) if it is a Domestic FirmG , comply with the requirements in Rule 11.10.9; and
        (b) if it is not a Domestic FirmG , comply with the requirements in Rule 11.10.10.
        (2) The requirement in (1) does not apply to an Authorised FirmG which is a Credit Rating AgencyG or a firm in Category 3 (as defined in PIB Rules 1.3.3 to 1.3.5) or Category 4 (as defined in PIB Rule 1.3.6).
        (3) Subject to (4), an Authorised FirmG makes a Major AcquisitionG if it makes or proposes to directly or indirectly acquire a shareholding in a Body CorporateG where that acquisition:
        (a) is of a value (whether by one acquisition or a series of acquisitions) of 10% or more of:
        (i) the Authorised Firm'sG Capital ResourcesG , if it is a Domestic FirmG which is a Category 1 Authorised FirmG (as defined in PIB Rule 1.3.1), Category 2 Authorised FirmG (as defined in PIB Rule 1.3.2) or Category 5 Authorised FirmG (as defined in PIB Rule 1.3.7); or
        (ii) the Authorised Firm'sG Adjusted Capital ResourcesG , if it is a Domestic FirmG conducting Insurance BusinessG ; or
        (iii) the capital resources of the Authorised FirmG calculated in accordance with the requirements of the Financial Services RegulatorG in its home jurisdiction, if it is not a Domestic FirmG ; or
        (b) even if it does not exceed the 10% threshold referred to in (a), it is reasonably likely to have a significant regulatory impact on the Authorised Firm'sG activities.
        (4) An acquisition is not a Major AcquisitionG for the purposes of (3) if it is an investment made by an Authorised FirmG :
        (a) in accordance with the terms of a contract entered into by the Authorised FirmG as an incidental part of its ordinary business; or
        (b) as a routine transaction for managing the Authorised Firm'sG own investment portfolio and therefore can reasonably be regarded as made for a purpose other than acquiring management or control of a Body CorporateG either directly or indirectly.
        Derived from Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM96/2012 (Made 24th July 2012) [VER30/07-12]
        [Amended] DFSA RM166/2016 (Made 10th February 2016). [VER36/04-16]

        • GEN 11.10.8 Guidance

          1. Examples of the kind of investments referred to in Rule 11.10.8(3)(b) include an acquisition of a stake in a small specialised trading firm that engages in high risk trades or other activities that could pose a reputational risk to the Authorised FirmG .
          2. The onus is on an Authorised FirmG proposing to make an acquisition to consider whether it qualifies as a Major AcquisitionG under Rule 11.10.8(3)(b). Generally, in the case of an Authorised FirmG that is not a Domestic FirmG (i.e. a BranchG operation in the DIFCG ), the significant regulatory impact referred to in Rule 11.10.8 (3)(b) should be prudential risk to the Authorised FirmG as a whole. If an Authorised FirmG is uncertain about whether or not a proposed acquisition qualifies as a Major AcquisitionG under Rule 11.10.8 (3)(b), the Authorised FirmG may seek guidance from the DFSAG .
          3. Examples of contractual arrangements of the kind referred to in Rule 11.10.8(4)(a) include enforcement of a security interest in the securities of the investee Body CorporateG or a loan workout pursuant to a loan agreement entered into between a bank and its client.
          4. Examples of the kind of investments referred to in Rule 11.10.8(4)(b) include temporary investments, such as investments included in the Authorised Firm'sG trading book or which are intended to be disposed of within a short term (e.g. within 12 months).

      • GEN 11.10.9

        (1) An Authorised FirmG which is a Domestic FirmG must:
        (a) before making a Major AcquisitionG :
        (i) notify the DFSAG in writing of the proposed Major AcquisitionG at least 45 days prior to the proposed date for effecting the Major AcquisitionG ; and
        (ii) give to the DFSAG all the relevant information relating to that Major AcquisitionG to enable the DFSAG to assess the impact of the proposed Major AcquisitionG on the Authorised FirmG ; and
        (b) not effect the proposed Major AcquisitionG unless:
        (i) the Authorised FirmG has either received written advice from the DFSAG that it has no objection to that Major AcquisitionG or has not received any written objection or request for additional information from the DFSAG within 45 days after the date of the notification; and
        (ii) if the DFSAG has imposed any conditions relating to the proposed Major AcquisitionG , it has complied with, and has the on-going ability to comply with, the relevant conditions.
        (2) The DFSAG may only object to a proposed Major AcquisitionG if it is of the view that the proposed Major AcquisitionG is reasonably likely to have a material adverse impact on the Authorised Firm'sG ability to comply with its applicable regulatory requirements or on the financial services industry in the DIFCG as a whole. The DFSAG may also impose any conditions it considers appropriate to address any concerns it may have in relation to the proposed Major AcquisitionG .
        (3) Without limiting the generality of its powers, the factors that the DFSAG may take into account for the purposes of (2) include:
        (a) the financial and other resources available to the Authorised FirmG to carry out the proposed Major AcquisitionG ;
        (b) the possible impact of the proposed Major AcquisitionG upon the Authorised Firm'sG resources, including its capital, both at the time of the acquisition and on an on-going basis;
        (c) the managerial capacity of the Authorised FirmG to ensure that the activities of the investee Body CorporateG are conducted in a prudent and reputable manner;
        (d) the place of incorporation or domicile of the investee Body CorporateG and whether or not the laws applicable to that entity are consistent with the laws applicable to the Authorised FirmG . In particular, whether there are any secrecy constraints that are likely to create difficulties in relation to the DFSAG requirements including those relating to consolidated supervision by the DFSAG where applicable; and
        (e) any other undue risks to the Authorised FirmG or the financial services industry in the DIFCG as a whole arising from the proposed Major AcquisitionG .

        • GEN 11.10.9 Guidance

          Factors which the DFSAG may take into account in assessing whether there are any undue risks arising from the proposed Major AcquisitionG include the size and nature of the business of the investee Body CorporateG , its reputation and standing, its present and proposed management structure and the quality of management, the reporting lines and other monitoring and control mechanisms available to the Authorised FirmG and the past records of the Authorised FirmG relating to acquisitions of a similar nature.

      • GEN 11.10.10

        (1) An Authorised FirmG which is not a Domestic FirmG must:
        (a) notify the DFSAG in writing of any Major AcquisitionG in accordance with the notification requirement applying to the Authorised FirmG under the requirements of the Financial Services RegulatorG in its home jurisdiction (the home regulator); and
        (b) if there is no notification requirement applying to the Authorised FirmG under (a), comply with the requirements in Rule 11.10.9 as if it were a Domestic FirmG . The DFSAG must follow the same procedures, and shall have the same powers, as set out in Rule 11.10.9 in relation to such a notification.
        (2) An Authorised FirmG which gives to the DFSAG a notification under (1)(a) must:
        (a) notify the DFSAG of the Major AcquisitionG at the same time as it notifies the home regulator;
        (b) provide to the DFSAG the same information as it is required to provide to the home regulator; and
        (c) provide to the DFSAG copies of any communications it receives from the home regulator relating to the notification it has provided to the home regulator as soon as practicable upon receipt.

      • GEN 11.10.11

        (1) The DFSAG may, for the purposes of the requirements in this section, require from an Authorised FirmG any additional information relating to the Major AcquisitionG as it may consider appropriate. An Authorised FirmG must provide any such additional information to the DFSAG promptly.
        (2) The DFSAG may, where it considers appropriate, withdraw its no objection position or modify or vary any condition it has imposed or any remedial action it has required under the RulesG in this section.
        Derived from Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM131/2014 (Made 21st August 2014). [VER34/06-14]

        • GEN 11.10.11 Guidance

          The DFSAG will generally not withdraw a no objection position it has conveyed to an Authorised FirmG , except in very limited circumstances. An example of such a situation is where the Authorised FirmG is found to have provided to the DFSAG inaccurate or incomplete information and that commission or omission has a material impact on the DFSA'sG no objection decision.

      • GEN 11.10.12

        (1) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under Rules 11.10.9, 11.10.10 and 11.10.11 to object to an acquisition or to impose or vary conditions.
        (2) If the DFSAG decides to exercise its power under Rule 11.10.9, 11.10.10 and 11.10.11 to object to an acquisition or to impose or vary conditions, the Authorised FirmG may refer the matter to the FMTG for review.
        Derived from Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM131/2014 (Made 21st August 2014). [VER34/06-14]

    • Suspected Market Abuse

      • GEN 11.10.12A

        (1) An Authorised FirmG must notify the DFSA immediately if it:
        (a) receives an order from a ClientG , or arranges or executes a transaction with or for a ClientG ; and
        (b) has reasonable grounds to suspect that the order or transaction may constitute Market AbuseG .
        (2) The notification under (1) must specify:
        (a) sufficient details of the order or transaction; and
        (b) the reasons for the Authorised FirmG suspecting that the order or transaction may constitute Market AbuseG .
        (3) An Authorised FirmG must not inform the ClientG , or any other PersonG involved in the order or transaction, of a notification under this Rule.
        Derived DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

        • GEN 11.10.12A Guidance

          1. Under GEN Rule 5.3.20, an Authorised FirmG must establish and maintain systems and controls that ensure that it and its employees do not engage in market abuse or facilitate others to engage in market abuse, whether in the DIFCG or elsewhere. GEN Rule 11.10.12A requires the firm to notify the DFSA if it reasonably suspects that a client's order or transaction may constitute Market AbuseG under Part 6 of the Markets Law.
          2. In some cases, a suspicion of Market AbuseG may arise when an order is received. In other cases, it may not be apparent until a transaction is executed or when viewed in the context of later information, behaviour or transactions. When a firm submits a notification, it should be able to explain to the DFSA its reasons for suspecting that the order or transaction may constitute Market Abuse.
          3. The details of the order or transaction provided with the notification should include the date and time of the order or transaction, the relevant Investment, the client and other parties involved, the nature of the order (e.g. limit order or market order), the nature of the transaction (e.g. on-exchange or OTC) and if the client was acting on its own account or for a third party.
          4. If a firm reasonably suspects that a client's order or transaction may constitute market abuse under the laws in another jurisdiction, it will also need to consider if it needs to notify the regulator in that other jurisdiction (under any corresponding obligation to notify).
          5. If an Authorised FirmG becomes aware that the firm itself, or an employee of the firm, (rather than a client) has engaged in conduct that may constitute market abuse in the DIFCG or elsewhere, it has a separate obligation to notify the DFSA under Article 67 of the Regulatory Law and GEN Rule 11.10.7.
          Derived DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

    • Fraud and errors

      • GEN 11.10.13

        An Authorised PersonG must notify the DFSAG immediately if one of the following events arises in relation to its activities in or from the DIFCG :

        (a) it becomes aware that an EmployeeG may have committed a fraud against one of its customers;
        (b) a serious fraud has been committed against it;
        (c) it has reason to believe that a PersonG is acting with intent to commit a serious fraud against it;
        (d) it identifies significant irregularities in its accounting or other records, whether or not there is evidence of fraud; or
        (e) it suspects that one of its EmployeesG who is connected with the Authorised Person'sG Financial ServicesG may be guilty of serious misconduct concerning his honesty or integrity.

    • Other regulators

      • GEN 11.10.14

        An Authorised PersonG must advise the DFSAG immediately of:

        (a) the granting or refusal of any application for or revocation of authorisation to carry on financial services in any jurisdiction outside the DIFCG ;
        (b) the granting, withdrawal or refusal of an application for, or revocation of, membership of the Authorised PersonG of any regulated exchange or clearing house;
        (c) the Authorised PersonG becoming aware that a Financial Services RegulatorG has started an investigation into the affairs of the Authorised PersonG ;
        (d) the appointment of inspectors, howsoever named, by a Financial Services RegulatorG to investigate the affairs of the Authorised PersonG ; or
        (e) the imposition of disciplinary measures or disciplinary sanctions on the Authorised PersonG in relation to its financial services by any Financial Services RegulatorG or any regulated exchange or clearing house.

        • GEN 11.10.14 Guidance

          The notification requirement in Rule 11.10.14(c) extends to investigations relating to any employee or agent of an Authorised PersonG or a member of its GroupG , provided the conduct investigated relates to or impacts on the affairs of the Authorised PersonG .

    • Action against an Authorised Person

      • GEN 11.10.15

        An Authorised PersonG must notify the DFSAG immediately if:

        (a) civil proceedings are brought against the Authorised PersonG and the amount of the claim is significant in relation to the Authorised Person'sG financial resources or its reputation; or
        (b) the Authorised PersonG is prosecuted for, or convicted of, any offence involving fraud or dishonesty, or any penalties are imposed on it for tax evasion.

    • Winding up, bankruptcy and insolvency

      • GEN 11.10.16

        An Authorised PersonG must notify the DFSAG immediately on:

        (a) the calling of a meeting to consider a resolution for winding up the Authorised PersonG ;
        (b) an application to dissolve the Authorised PersonG or to strike it from the register maintained by the DIFC Registrar of CompaniesG , or a comparable register in another jurisdiction;
        (c) the presentation of a petition for the winding up of the Authorised PersonG ;
        (d) the making of, or any proposals for the making of, a composition or arrangement with creditors of the Authorised PersonG ; or
        (e) the application of any person against the Authorised PersonG for the commencement of any insolvency proceedings, appointment of any receiver, administrator or provisional liquidator under the law of any country.

    • Accuracy of information

      • GEN 11.10.17

        An Authorised PersonG must take reasonable steps to ensure that all information that it provides to the DFSAG in accordance with any legislation applicable in the DIFCG is:

        (a) factually accurate or, in the case of estimates and judgements, fairly and properly based; and
        (b) complete, in that it should include anything of which the DFSAG would reasonably expect to be notified.

      • GEN 11.10.18

        (1) An Authorised PersonG must notify the DFSAG immediately it becomes aware, or has information that reasonably suggests, that it:
        (a) has or may have provided the DFSAG with information which was or may have been false, misleading, incomplete or inaccurate; or
        (b) has or may have changed in a material particular.
        (2) Subject to (3), the notification in (1) must include details of the information which is or may be false or misleading, incomplete or inaccurate, or has or may have changed and an explanation why such information was or may have been provided and the correct information.
        (3) If the correct information in (2) cannot be submitted with the notification it must be submitted as soon as reasonably possible.

      • GEN 11.10.19

        In the case of an InsurerG which is a Protected Cell CompanyG , an InsurerG must advise the DFSAG immediately it becomes aware of any actual or prospective significant change in the type or scale of the business conducted through a CellG , or the ownership of the CellG shares.

    • Information relating to corporate governance and remuneration

      • GEN 11.10.20

        (1) Subject to (2), an Authorised FirmG must provide to the DFSA notice of any significant changes to its corporate governance framework or the remuneration structure or strategy as soon as practicable.
        (2) An Authorised FirmG which is a BranchG must provide notice of any significant changes to its corporate governance framework or the remuneration structure or strategy only if the changes are relevant to the activities and operations of the BranchG .
        [Added] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]

        • GEN 11.10.20 Guidance

          1. The purpose of these notifications is to ensure that the DFSAG is informed of any significant changes to the Authorised Firm'sG corporate governance framework and remuneration structure and strategies.
          2. Significant changes that the DFSAG expects Authorised FirmsG to notify the DFSAG pursuant to Rule 11.10.20 generally include:
          a. any major changes to the composition of the Governing BodyG ;
          b. any changes relating to Persons Undertaking Key Control FunctionsG , such as their removal or new appointments or changes in their reporting lines; and
          c. significant changes to the remuneration structure that apply to the members of the Governing BodyG , senior management, Persons Undertaking Key Control FunctionsG and major risk taking Employees.
          3. The DFSAG expects BranchesG to provide to the DFSAG notification of significant changes that are relevant to the BranchG operations.
          [Added] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]