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  • Consultation Paper No. 12 The Authorized Market Institution, Recognition and Offered Securities Modules of the DFSA Rulebook

    October 2004

    A DUBAI INTERNATIONAL FINANCIAL CENTRE Financial Services AUTHORITY ("DFSA") CONSULTATION PAPER ADDRESSED TO PARTIES INTERESTED IN THE DEVELOPMENT OF Financial Services AND MARKETS Regulation WITHIN DUBAI'S FINANCIAL FREE ZONE (THE "DIFC")

    1. Introduction

    This paper consults on the DFSA's proposed rules for the:

    • licensing of Exchanges and Clearing Houses (which includes settlement operators) operating from the DIFC as Authorised Market Institutions (the Authorised Market Institution or AMI module);
    • recognition of Exchanges and Clearing Houses providing services in the DIFC as Recognised Bodies (the Recognition or REC module);
    • recognition of firms located outside of the DIFC doing Financial Services in the DIFC on or through the facilities of an Authorised Market Institution as Recognised Members (also in the Recognition or REC module);
    • offering of Securities in or from the DIFC (the Offered Securities or OSR module);
    • listing of Securities by the DFSA (also in the Offered Securities or OSR module); and
    • ongoing obligations of persons who have made offers of Securities in or from the DIFC or who have had Securities listed by the DFSA (also in the Offered Securities Rules or OSR module).

    The AMI module is attached as Annex A, the REC module as Annex B and the OSR module as Annex C.

    This paper also consults on associated changes to other parts of the DFSA Rulebook. These changes are set out in Annexures D, E and F.

    The draft rules are published for consultation purposes only. Please note that, although the draft rules are in near final form, the DFSA reserves the right to amend the drafts at its sole discretion. The rules will be made under powers contained in the Regulatory Law 2004 and the Markets Law 2004.

    Comments are invited on any aspect of the regimes proposed in this paper, on both the principles and the detailed drafting. The DFSA would be particularly interested to have the views of firms considering using the proposed rules and views on how this regime compares with those in other major centres. In the light of the comments received, the DFSA may determine to adopt in whole, or in part, the proposals outlined in these papers, or may amend the proposals.

    Anyone wishing to submit comments should provide details of the organisation he or she represents. The names of commentators and the content of their submissions may be published on the DFSA website and in other documents to be published by the DFSA. If you wish your name to be withheld from publication, please indicate this when you make your submission.

    Any comments should be addressed to:
    Mr Nicholas Alves
    Legal Counsel
    DFSA
    PO Box 75850
    Dubai, UAE

    or e-mailed to nalves@dfsa.ae

    All comments should be provided in writing, on or before 8 December 2004

    2. Background and context

    The draft rules forming the AMI, REC and OSR modules and the associated changes to other parts of the DFSA Rulebook need to be considered in the context of the core Financial Services laws - the Regulatory Law 2004, the Markets Law 2004 and the Law Regulating Islamic Financial Business 2004.

    3. The DFSA rulebook

    The core Financial Services laws provide the DFSA with a wide range of powers, including powers to make rules and to issue Guidance. This Guidance is not binding, nor does it create a "safe harbour" protecting those who comply with it from action for breach of the underlying rule.

    The rules together make up a Rulebook containing a number of modules. The DFSA Rulebook may be viewed on the DFSA's website (www.dfsa.ae) along with all the DIFC Laws and Regulations.

    The DFSA has power to waive or modify rules, and is prepared to use this to adapt the rules to specific circumstances which may arise.

    4. Interpreting the rulebook

    Defined terms are identified throughout the Rulebook by the capitalisation of the initial letter of a word or of each word in a phrase and are defined in the Glossary (GLO). Please note that Annex F contains further definitions. Unless the context otherwise requires, where capitalisation of the initial letter is not used, an expression has its natural meaning.

    Every provision in the Rulebook must be interpreted in the light of its purpose. The purpose of any provision is to be gathered first and foremost from the text of the provision in question and its context among other relevant provisions. A provision means every type of provision, including Rules and Guidance.

    Where reference is made in the Rulebook to another provision of the Rulebook or other DIFC legislation, it is a reference to that provision as amended from time to time. If a provision in the Rulebook refers to a communication, notice, agreement, or other document 'in writing' then, unless the contrary intention appears, it means in legible form and capable of being reproduced on paper, irrespective of the medium used. Expressions Related to writing must be interpreted accordingly. Any reference to 'dollars' or '$' is a reference to United States Dollars unless the contrary intention appears. References to Articles made throughout the Rulebook are references to Articles in the Regulatory Law 2004 unless otherwise stated.

    Unless the contrary intention appears:

    • words in the Rulebook importing the masculine gender include the feminine gender and words importing the feminine gender include the masculine; and
    • words in the Rulebook in the singular include the plural and words in the plural include the singular.

    Unless the contrary intention appears, a day or business day refers to:

    • in relation to anything done or to be done in (including to be submitted to a place in) the u.a.e. any day which is not a Friday or Saturday or an official u.a.e. Bank holiday; and
    • in relation to anything done or to be done by reference to a market outside the u.a.e. any day on which that market is normally open for business.

    5. Purpose and summary of the material provisions of the AMI rules

    The rules in the AMI module are created under powers contained in the Regulatory Law 2004 and the Markets Law 2004. The purpose of the rules set out in the AMI module is to provide the necessary detail in relation to the:

    • process by which applicants must apply for a Licence to be an Authorised Market Institution;
    • process by which an Authorised Market Institution can change the scope of or withdraw its Licence;
    • rules in relation to the Controllers of an Authorised Market Institution;
    • Licensing Requirements, or standards, which the applicant must satisfy to be granted a Licence; and
    • supervisory regime to which an Authorised Market Institution will be subject on an ongoing basis including requirements in respect of its relationship with Regulators.

    An Authorised Market Institution is also subject to other modules of the DFSA Rulebook, including rules contained in the General, Supervision and Enforcement modules. The AMI module contains references to these rules. The changes contained in Annexures D and E are intended to apply appropriate provisions of other modules to Authorised Market Institutions.

    The Rules contained in the AMI module do not restrict the operation of an Exchange or a Clearing House in the DIFC to a single entity. Any Person wishing to establish an Exchange or Clearing House in the DIFC will however be subject to a transparent regulatory regime that requires the operating standards to be of a world-class international standard.

    Such standards are embodied in a set of Licensing Requirements which form the basis of the AMI module and relate to:

    (a) fitness and propriety;
    (b) proper markets;
    (c) financial resources;
    (d) human and technology resources;
    (e) systems and controls;
    (f) Members' access to facilities;
    (g) general safeguards for investors;
    (h) identification, deterrence and prevention of Market Misconduct, financial crime and Money laundering
    (i) promotion and maintenance of standards;
    (j) whistle blowing;
    (k) clearing and settlement;
    (l) Transaction recording;
    (m) safeguarding and administration of assets;
    (n) business rules;
    (o) compliance with business rules;
    (p) complaints; and
    (q) default rules

    An Authorised Market Institution can permit persons to use its facilities on the basis of criteria approved by the DFSA. This could mean that persons based outside of the DIFC are permitted use of the facilities operated by an Authorised Market Institution; these types of firm are commonly known as remote Members and will need to be recognised by the DFSA under the rules contained in the REC module.

    6. Purpose and summary of the material provisions of the REC rules

    The rules in the REC module are created under powers contained in the Regulatory Law 2004. The purpose of the rules set out in the REC module is to provide the necessary detail in relation to the:

    • processes by which applicants must apply for Recognition by the DFSA and where applicable for changing the scope of their recognition;
    • Recognition Requirements for Recognised Bodies;
    • information required by the DFSA for Recognition of a firm as a Recognised Member; and
    • general provisions that apply to Recognised Bodies and Recognised Members and applicants for Recognition.

    The regime places substantial reliance on the supervisory arrangements to which the Recognised Person is subject in another jurisdiction and focuses upon events and activities that may affect the DIFC. The rules require that an applicant for Recognition is regulated in a jurisdiction outside of the DIFC to a standard considered satisfactory by the DFSA and that the DFSA has appropriate arrangements for information sharing with the relevant regulator of the Recognised Body or the Recognised Member.

    Recognised Persons are subject only to the rules in the REC module and some other rules in the DFSA Rulebook which are prescribed by this module.

    7. Purpose and summary of the material provisions of the OSR rules

    The Markets Law of 2004 makes provision for the Regulation of offers of Securities in or from the DIFC, together with the initial and ongoing responsibilities of offerors and Reporting Entities. This module will be of relevance to companies incorporated in the DIFC who wish to raise capital by a public Offer, to companies incorporated elsewhere which wish to raise capital in the DIFC, or from it, and to those advising such persons. It applies whether the Offer made in or from the DIFC is to be by way of an issue of traded Securities on the DIFX or by any other form of issue including a public Offer of unlisted Securities.

    This module further defines the concepts of Offer and exempt Offer and also contains rules relating to initial disclosure, continuing disclosure and other obligations that arise at the time of, or as a result of, Offering or Listing Securities.

    The structure of the module is organised so that the main provisions are contained in each of the chapters, which are linked to appendices at the back of the module, detailing the requirements relating to the various product-specific Categories including Shares, Debentures, Certificates, Warrants and other financial products.

    The purpose of the rules set out in the OSR module is to provide the necessary operational detail in relation to the framework created by Parts 3 and 4 of the Markets Law 2004 in relation to offers of Securities in or from the DIFC (Part 3) and the listing of Securities by the DFSA (Part 4). In addition, the OSR module provides the detailed rules in relation to Parts 5 and 6 of the Markets Law 2004 which apply to persons on an ongoing basis who have utilised either Part 3 or 4 of the Markets Law 2004 (or both). These rules deal with corporate governance and disclosure obligations.

    The following paragraphs are a brief explanation of Parts 3 to 6 of the Markets Law 2004 and the OSR rules. The purpose of the explanation is merely to provide an overview of the substance and purpose of the legislation. Consequently, any Person subject to the legislation must refer to the Markets Law 2004 and the OSR module and not refer to this brief overview for the purposes of compliance with the legislation.

    Part 3 of the Markets Law 2004 defines offers of Securities as offers by a Person as a principal which, if accepted would give rise to a contract for the issue of Securities by him or another. It also allows for certain types of Offer to be subject to provisions contained in the DIFC collective Investment law (currently being drafted) rather than the Markets Law 2004.

    A general prohibition on offers of Securities (whether listed or unlisted) is created by the Markets Law 2004 unless the Offer is:

    (a) an exempt offer; or
    (b) a Prospectus Offer.

    The main difference between an exempt Offer and a Prospectus Offer is that a Person making an exempt Offer is not required to file a Prospectus with the DFSA before making the Offer. Certain types of offers are exempt from the Prospectus requirement owing to the nature or the content of the Offer, such as offers to professional investors which is an exemption prescribed by the Markets Law 2004. The Markets Law 2004 also contains exemptions relating to offers by Exempt Offerors or offers already subject to Takeover provisions and allows further types to be prescribed in the OSR module.

    The Markets Law 2004 requires that a Prospectus must contain (including but not limited to) all the information an investor would reasonably require for the purpose of making an informed assessment of the assets and liabilities, financial position, profits and losses of the Issuer or Offeror of the Securities and the nature of the Securities, as well as complying with any other requirements. A Prospectus that is filed with the DFSA must comply with the Markets Law 2004 and the OSR rules.

    The DFSA has power to issue stop orders in relation to offers where it is satisfied that the law or the rules in the OSR module have or would be contravened. Stop orders effectively prevent an Offer from proceeding and the exercise of this power is subject to appeal procedures.

    Part 4 of the Markets Law 2004 creates the framework for listing applications and decisions on application for listing. Admission to the Register of Listed Securities is required to be made in accordance with the requirements of the OSR module and applicants will be informed about decisions on applications in writing. The DFSA may also suspend or delist Securities from the Register of Listed Securities, if it satisfied there are special circumstances which preclude regular dealings in the Securities or it is in the interests of the DIFC. All decisions under Part 4 are subject to appeal procedures.

    Part 5 applies corporate governance principles to Reporting Entities (normally those persons who have filed a Prospectus in order to Offer Securities or have Securities listed or both). Part 6 has the same application and imposes reporting requirements on the Reporting Entity in relation to the continuous disclosure of price sensitive and similar information, disclosures of Related financial interests by Connected persons and also financial reporting requirements.

    Further to the provisions of the Markets Law 2004 as briefly described above, the rules in the OSR module also:

    • specify further activities which constitute an Offer of Securities in relation to sales and financial promotion activities relating to Securities in or from the DIFC;
    • specify some other types of Offer that are Exempt Offers, and therefore not subject to the Prospectus filing requirement, which include offers of Commercial Paper, offers where the total consideration does not exceed US$1,000,000 and offers to less than 25 people in a 12 month period;
    • create some limited requirements associated with some types of Exempt Offers which include an exempt Offer statement requirement and restrictions to whom some Exempt Offers may be made, which is known as the Qualified Investor restriction;
    • create requirements for Prospectus contents and rules for the Recognition of documents produced under the rules of other jurisdictions;
    • prescribe listing requirements and the process for Securities to be admitted to the Register of Listed Securities by the DFSA;
    • provides a process by which the DFSA will exercise its powers in relation to the suspension and de-listing of listed securities;
    • details responsibility and liability for the contents of Prospectus filed with the DFSA as part of either a Prospectus Offer or listings application;
    • provides a process by which ongoing continuous disclosure requirements are made and to which limited exceptions are available;
    • other disclosure requirements on a Person, (the Reporting Entity) who has made an Offer of Securities in or from the DIFC or who has Securities on the Register of Listed Securities;
    • provides details on the appointment of Sponsors and their duties in relation to either offers of Securities, listing applications or compliance with ongoing disclosure obligations as a Reporting Entity;
    • sets out provisions in relation to contraventions, enforcement and stop orders; and
    • general provisions in relation to Fees.

    The requirements of the DIFC may be different to those in other jurisdictions. Persons located outside of the DIFC will need to consider if their Offer is being made in the DIFC and is caught by the application of the OSR module. Such persons will also need to consider any relevant legislation in their home State. Some Guidance on cross-border offers is provided in the OSR module section 2.2.

    8. The wholesale nature of the DIFC

    The DIFC is fundamentally a wholesale financial centre. Authorised Firms are subject to a restriction which prevents them from carrying on Financial Services with another Person unless that Person is a Client or a Commercial Customer. These expressions are defined in the Glossary, but in both cases refer to a Person who is not a Retail Customer.

    The OSR module implements the wholesale concept but only in relation to Exempt Offers. Such offers are subject to restrictions as to whom the relevant Securities may be sold, namely only to Qualified Investors. A Qualified Investor equates to a Client. This restriction in the OSR module applies not only to Authorised Firms but to any Person making an exempt Offer. Prospectus offers on the other hand may be made to any Person so long as the Offeror is not an Authorised Firm.

    • Annex A Authorized Market Institutions (AMI)

      This ANNEX contains all the Rules comprising the new AMI module. As the entire module consists of new Rules, the text is not underlined.

      AMI 1 Introduction

      AMI 1.1 Application

      AMI 1.1.1

      (1) Subject to (2), this module applies to every Person who carries on, or intends to carry on, either or both of the Financial Services of Operating an Exchange or Operating a Clearing House in or from the DIFC.
      (2) This module does not apply to a Recognised Body or a Person who intends to carry on a Financial Service as a Recognised Body.

      AMI 1.1.2

      Chapter 6 also applies to a Person who is, or proposes to become, a Controller as specified in rule 6.1.2.

      AMI 1.1.2 Guidance

      Interpretations

      1. References to Articles in this module are references to Articles in the Regulatory Law 2004 unless stated otherwise.

      The Regulatory Law 2004 and the Markets Law 2004

      2. The Regulatory Law 2004 establishes a Principle based framework for the licensing and supervision of Authorised Market Institutions and for taking regulatory action against those licensed institutions. This framework is supplemented by some supervisory powers and other requirements in relation to Authorised Market Institutions in the Markets Law 2004. The Laws provide for the creation of Rules in relation to these activities. This module contains those Rules.

      AMI 1.2 Financial Services, Ancillary Services and Authorised Market Institutions

      AMI 1.2 Guidance

      Financial Services

      1. Articles 41 and 42 prohibit a Financial Service from being carried on in or from the DIFC unless it is carried on by an Authorised Firm or an Authorised Market Institution whose Licence authorises it to do so or by a Recognised Body in respect of those Financial Services set out in its Recognition Notice. REC provides relevant Rules in respect of Recognised Bodies and, accordingly, Recognised Bodies are not the subject of this module.
      2. GEN prescribes activities which comprise Financial Services and which may be carried on by an Authorised Firm or Authorised Market Institution.

      Ancillary Services

      3. Article 44(1) prohibits Ancillary Services from being carried on in or from the DIFC unless they are carried on by an Ancillary Services Provider whose registration allows it to do so.
      4. The ASP module prescribes the Ancillary Services which may be carried on by a Ancillary Services Provider. An Exchange, Clearing House or settlement operator already established outside of the DIFC may, if not carrying on a Financial Service in or from the DIFC, instead apply to register to conduct the Ancillary Service of Operating a Management Office, Operating a Local Services Office or both in or from the DIFC.

      Authorised Market Institutions and regulatory processes

      5. This module sets out the DFSA's regulatory process in relation to Authorised Market Institutions. The regulatory processes contained here supplement other Rules that relate to Authorised Market Institutions which are set out in the GEN, SUP and ENF modules of the DFSA Rulebook.
      6. The following modules of the DFSA Rulebook, in addition to this module, apply to Authorised Market Institutions:

      Module Applicable chapters
      General (GEN) 1, 2, 3, 5, 6 ,7 and 8
      Supervision (SUP) All chapters
      Enforcement (ENF) All chapters
      7. Chapters 2 to 5 and chapter 7 set out the requirements for a new Licence application and also an application by an existing Authorised Market Institution to change the scope of its Licence.
      8. Chapters 9 and 10 contain Rules relating to the supervision of Authorised Market Institutions and are in addition to those set out in SUP and include a series of notification requirements, anti Money Laundering provisions and supervisory directions that may be made by the DFSA to Authorised Market Institutions under Article 10 of the Markets Law 2004.
      9. Chapter 11 refers to specific requirements applying to Authorised Market Institutions Undertaking Islamic Financial Business under the Law Regulating Islamic Financial Business 2004.
      10. Chapter 12 refers to ENF which describes the DFSA's enforcement powers under the Regulatory Law 2004 and outlines the policy for using these powers. ENF also establishes the framework for the DFSA's decision making process and the giving of notice in relation to enforcement powers.

      Change in control

      11. Chapter 6 of this module covers the requirements with regard to changes and proposed changes to an Authorised Market Institution's Controllers.

      AMI 2 Application for a Licence

      AMI 2.1 Application

      AMI 2.1.1

      This chapter applies to a Person who intends to carry on either or both of the Financial Services of Operating an Exchange or Operating a Clearing House in or from the DIFC.

      AMI 2.1.2

      A Person who intends to carry on either or both of the Financial Services is referred to in this chapter as an applicant.

      AMI 2.1.2 Guidance

      An applicant, or potential applicant, to be an Authorised Market Institution is advised to contact the DFSA to discuss their application at the earliest possible time, but at least prior to the submission of any written documentation. In particular, the appropriateness of such a Licence will be discussed in relation to the proposed business activities.

      AMI 2.2 Licence application

      AMI 2.2.1

      An applicant must apply to the DFSA for a Licence in accordance with the Rules in this chapter.

      AMI 2.2.1 Guidance

      If a Person intends to carry on a Financial Service which is not:

      a. Operating an Exchange; or
      b. Operating a Clearing House;
      it should apply to the DFSA for a Licence in accordance with the Rules in AUT.

      AMI 2.2.2

      The DFSA will only consider an application for a Licence from an applicant who is a Body Corporate and who is not an Authorised Firm or an applicant to be an Authorised Firm.

      AMI 2.2.3

      A Person wishing to make an application for a Licence must submit a written application to the DFSA:

      (a) demonstrating how the applicant intends to satisfy the Licensing Requirements and any other applicable requirements; and
      (b) with copies of any relevant agreements or other information in relation to (a).

      AMI 2.2.4

      A Person submitting an application must pay the appropriate application Fees as set out in GEN chapter 7.

      AMI 2.2.5

      (1) An applicant will only be authorised to carry on either or both of the Financial Services of Operating an Exchange or Operating a Clearing House if the DFSA is satisfied that the applicant:
      (a) has satisfied or will satisfy the Licensing Requirements in relation to the nature of the Financial Services concerned;
      (b) is fit and proper; and
      (c) will conduct and manage its affairs in a sound and prudent manner.
      (2) In making the assessment as to whether an applicant is fit and proper, the DFSA will consider:
      (a) the applicant's connection with its Controllers or any other Person;
      (b) the Financial Services concerned;
      (c) any matter which may harm or may have harmed the integrity or the reputation of the DFSA or DIFC;
      (d) the activities of the applicant, the associated risks and accumulation of risks, that those activities pose to the DFSA's objectives; and
      (e) any other relevant matters.

      AMI 2.2.6

      In assessing an application for a Licence, the DFSA may:

      (a) carry out any enquiries which it considers appropriate (including enquiries independent of the applicant);
      (b) require the applicant to provide additional information in such form as the DFSA considers appropriate;
      (c) require any information submitted by the applicant to be verified in such manner as the DFSA may specify; and
      (d) take into account any information which the DFSA considers appropriate in relation to the applicant.

      AMI 2.2.6 Guidance

      If an applicant becomes aware of a material change in circumstances that is reasonably likely to be relevant to an application which is under consideration by the DFSA, it should inform the DFSA of the change, in writing, without delay.

      AMI 2.2.7

      (1) In assessing an application for a Licence, the DFSA may, by means of written notice, indicate the legal form that the applicant must adopt to enable authorisation to be granted.
      (2) Where the DFSA thinks it appropriate it may treat an application made by one legal form or Person as having been made by the new legal form or Person.

      AMI 3 Application to change the Scope of a Licence

      AMI 3.1 Application

      AMI 3.1.1

      This chapter applies to an Authorised Market Institution applying to change the scope of its Licence or, where a condition or restriction has previously been imposed, to have the condition or restriction varied or withdrawn.

      AMI 3.1.2

      An Authorised Market Institution applying to change the scope of its Licence, or to have a condition or restriction varied or withdrawn, must provide the DFSA with written details of the proposed changes including an assessment of how it intends to satisfy the Licensing Requirements in relation to the new Licence scope.

      AMI 3.1.2 Guidance

      Where an Authorised Market Institution applies to change the scope of its Licence, it should provide at least the following information:

      a. particulars of the new Financial Service and date of proposed commencement of activities;
      b. a revised business plan as appropriate, describing the basis of, and rationale for, the proposed change;
      c. details of the extent to which existing documentation, procedures, systems and controls will be amended to take into account any additional activities, and how the Authorised Market Institution will be able to comply with any additional regulatory requirements including the Licensing Requirements; and
      d. where the Authorised Market Institution is reducing its activities and where it has existing Members who may be affected by the cessation of a Financial Service, details of any transitional arrangements should be provided.

      AMI 4 Determination of Applications

      AMI 4 Guidance

      1.Article 47(1) states that the DFSA may refuse to grant a Licence or a change to the scope of an existing Licence.
      2. Article 48 states that the DFSA may grant an application for a Licence or a change to a Licence, with or without conditions and restrictions.
      3. Under Article 50(3)(e), the DFSA may withdraw authorisation in relation to one or more Financial Services at the request of an Authorised Market Institution.
      4. Upon determination of an application under Articles 47(1), 48(1) or 50(3)(e) as referred to above, the DFSA will without undue delay notify the applicant or Authorised Market Institution in writing of the decision.

      AMI 5 Withdrawal of a Licence

      AMI 5.1 Application

      AMI 5.1.1

      This chapter applies to an Authorised Market Institution.

      AMI 5.2 Withdrawal of a Licence at an Authorised Market Institution's request

      AMI 5.2.1

      An Authorised Market Institution seeking to have its Licence withdrawn must submit a request in writing stating:

      (a) the reasons for the request;
      (b) the date on which it will cease to carry on Financial Services in or from the DIFC; and
      (c) that it has discharged, or will discharge, all obligations owed to its users in respect of whom the Authorised Market Institution has carried on Financial Services in or from the DIFC.

      AMI 5.2.1 Guidance

      1. The DFSA will need to be satisfied when considering requests under rule 5.2.1, that an Authorised Market Institution has made appropriate arrangements with respect to its existing users (including the receipt of consent where required) and, in particular:
      a. whether there may be a long period in which the business will be wounddown or transferred;
      b. whether Money and other assets belonging to users must be returned to them; and
      c. whether there is any other matter which the DFSA would reasonably expect to be resolved before granting a request for the withdrawal of a Licence.
      2. In determining a request for the withdrawal of a Licence, the DFSA may require additional procedures or information as appropriate including evidence that the Authorised Market Institution has ceased to carry on Financial Services.
      3. Detailed plans should be submitted where there may be an extensive period of wind down. It may not be appropriate for an Authorised Market Institution to immediately request a withdrawal of its Licence in all circumstances, although it may wish to consider reducing the scope of its Licence during this period. Authorised Market Institutions should discuss these arrangements with the DFSA.
      4. The DFSA may refuse a request for the withdrawal of a Licence where it appears that users and customers may be adversely affected.
      5. The DFSA may also refuse a request for the withdrawal of a Licence where:
      a. the Authorised Market Institution has failed to settle its debts to the DFSA; or
      b. it is in the interests of a current or pending investigation by the DFSA, or by another regulatory body or Financial Services Regulator.
      6. Under Article 63 where the DFSA grants a request for the withdrawal of a Licence, the DFSA may continue to exercise any power under the Regulatory Law 2004, the Markets Law 2004 or Rules in relation to an Authorised Market Institution for two years from the date on which the Licence was withdrawn.

      AMI 5.3 Withdrawal of a Licence on the DFSA's initiative

      AMI 5.3 Guidance

      In section 5.2 above, an application to withdraw a Licence will be at the Authorised Market Institution's request. Under Article 51, the DFSA may act on its own initiative to withdraw an Authorised Market Institution's Licence in cases when the Authorised Market Institution no longer has authority to carry on any Financial Service, is no longer meeting the conditions of its Licence or has failed to remove a Controller in the circumstances described in Article 64.

      AMI 6 Controllers

      AMI 6.1 Application

      AMI 6.1.1

      This chapter applies to:

      (a) an Authorised Market Institution; or
      (b) a Person who is, or is proposing to become, a Controller.

      AMI 6.1.2

      (1) A Controller is a Person who, either alone or with any Associate:
      (a) holds 10% or more of an Authorised Market Institution's shares;
      (b) is entitled to exercise, or control the exercise, of 10% or more of the voting rights in respect of an Authorised Market Institution;
      (c) is able to exercise significant management influence over management via a shareholding in an Authorised Market Institution; or
      (d) meets one or more of conditions of (a), (b), or (c) in respect of a Holding Company of an Authorised Market Institution.
      (2) In (1), a share means:
      (a) in relation to an Authorised Market Institution or a Holding Company of an Authorised Market Institution with share capital, allotted shares;
      (b) in relation to an Authorised Market Institution or a Holding Company of an Authorised Market Institution with capital but no share capital, rights to a share in the capital of the Authorised Market Institution or a Holding Company of an Authorised Market Institution; or
      (c) in relation to an Authorised Market Institution or a Holding Company of an Authorised Market Institution without capital, interest:
      (i) conferring any right to share in the profits, or liability to contribute to the losses, of the Authorised Market Institution or a Holding Company of an Authorised Market Institution; or
      (ii) giving rise to any obligation to contribute to the debt or expenses of an Authorised Market Institution or a Holding Company of an Authorised Market Institution in the event of a winding up of the Authorised Market Institution or a Holding Company of the Authorised Market Institution.

      AMI 6.2 Applications and notifications concerning a change in control

      AMI 6.2 Guidance

      1. In considering an application for approval, or a notification, of a change in control, the DFSA must be satisfied that an Authorised Market Institution continues to satisfy the Licensing Requirements and remains fit and proper in light of any changes in control.
      2. Where the DFSA deems a Controller to be unacceptable and the Authorised Market Institution fails to ensure the Controller is removed or take other specified action to the DFSA's satisfaction, the DFSA may withdraw the Authorised Market Institution's Licence under Article 64.

      AMI 6.2.1

      A Person must not act as a Controller of an Authorised Market Institution unless it, or the Authorised Market Institution, has:

      (a) obtained prior approval in accordance with rule 6.2.3(2); or
      (b) made a prior notification in accordance with rule 6.2.3(3) or rule 6.2.5(2), as may be applicable.

      AMI 6.2.2

      An Authorised Market Institution must take reasonable steps to monitor changes or proposed changes concerning:

      (a) its Controllers;
      (b) the level of control of existing Controllers; and
      (c) significant changes in the circumstances of existing Controllers which might reasonably be considered to affect the fitness and propriety of the Authorised Market Institution.

      AMI 6.2.2 Guidance

      1. Steps taken by an Authorised Market Institution to comply with rule 6.2.2 must have regard to the approval and notification requirements set out in this chapter.
      2. Reasonable steps in rule 6.2.2 should include, but are not limited to, the monitoring of any relevant regulatory disclosures, press reports, public announcements, share registers and entitlements to vote, or the control of voting rights, at general meetings.

      AMI 6.2.3

      (1) Where the Authorised Market Institution is incorporated under DIFC Law and a Person proposes to become a Controller or, in respect of an existing Controller, the level of control changes in regard to the kind of shareholding and influence set out in rule 6.1.2(1), as a result of the events described in (2) or (3) below, the Authorised Market Institution must submit a notification or application to the DFSA as applicable.
      (2) The events mentioned in (1) which trigger a written application for prior approval are as follows:
      (a) a Person becomes a Controller;
      (b) when a holding is increased from below 10% to 10% or more;
      (c) when a holding is increased from below 30% to 30% or more;
      (d) when a holding is increased from below 50% to 50% or more; or
      (e) when any significant management influence as identified under rule 6.1.2(1)(c) or (d), occurs which has not previously been disclosed to the DFSA.
      (3) The event mentioned in (1) which triggers a written notification is when a holding is decreased from more than 50% to 50% or less.
      (4) An application for prior approval or notification must be submitted to the DFSA using the appropriate form in PFN.

      AMI 6.2.4

      (1) An Authorised Market Institution must submit the notification or application required in rule 6.2.3(1) not less than 28 days in advance of a proposed change or, where this is not reasonably possible, immediately on becoming aware of a proposed or actual change in control.
      (2) Where an Authorised Market Institution is not reasonably able to comply with (1), the Person identified in rule 6.1.1(b) must submit the required notification or application for approval.
      (3) In the event of (2), an Authorised Market Institution must notify the DFSA in writing of the relevant circumstances and must also, at the same time, notify the Person in (2) of their obligations under this chapter.

      AMI 6.2.5

      (1) Where the Authorised Market Institution is incorporated other than under DIFC Law and a Person proposes to become a Controller or, in respect of an existing Controller, the level of control changes in regard to the kind of shareholding and influence set out in rule 6.1.2(1), as a result of the events described in (2) or (3) below, the Authorised Market Institution or must submit a notification to the DFSA.
      (2) The events mentioned in (1) which trigger a notification are as follows:
      (a) a Person becomes a Controller;
      (b) when a holding is increased from below 10% to 10% or more;
      (c) when a holding is increased from below 30% to 30% or more;
      (d) when a holding is increased from below 50% to 50% or more;
      (e) when a holding is decreased from more than 50% to 50% or less; or
      (f) when any significant management influence as identified under rule 6.1.2(1)(c) or (d), occurs which has not previously been disclosed to the DFSA.
      (3) An application for prior approval or notification must be submitted to the DFSA using the appropriate form in PFN.

      AMI 6.2.6

      (1) An Authorised Market Institution must submit the notification required in rule 6.2.5(1) not less than 28 days in advance of a proposed change or, where this is not reasonably possible, immediately on becoming aware of a proposed or actual change in control.
      (2) Where an Authorised Market Institution is not reasonably able to comply with (1), the Person identified in rule 6.1.1(b) must submit the required notification.
      (3) In the event of (2), an Authorised Market Institution must notify the DFSA in writing of the relevant circumstances and must also, at the same time, notify the Person in (2) of their obligations under this chapter.

      AMI 6.2.6 Guidance

      1. In determining an application for approval made in accordance with rule 6.2.3 the DFSA will consider all relevant information.
      2. The DFSA will endeavour to determine applications made in accordance with rule 6.2.3 within 28 days of receipt of all the required information being submitted, or such shorter time as may be agreed in exceptional circumstances.
      3. The DFSA will only respond to a notification made in accordance with Rules 6.2.3 or 6.2.5 if it requires further information in light of the changes referred to in the notification.
      4. Rules 6.2.3 or 6.2.5 also applies in certain circumstances where a change in control has occurred, without a Controller having taking any action. This may arise, for example, after a capital re-organisation.

      AMI 6.3 Annual reporting of controllers

      AMI 6.3.1

      An Authorised Market Institution must submit to the DFSA an annual report on its Controllers within four months of its financial year end.

      AMI 6.3.2

      The Authorised Market Institution's annual report on its Controllers must include:

      (a) the name and address of each Controller;
      (b) the current holding of each Controller (expressed as a percentage of issued capital); and
      (c) where a Person is a Controller by virtue of the operation of rule 6.1.2(c) or (d), the circumstances that cause it to be such a Controller.

      AMI 6.3.2 Guidance

      An Authorised Market Institution may satisfy the requirements of rule 6.3.2 by submitting a corporate structure diagram along with the relevant information.

      AMI 7 Licensing Requirements

      AMI 7.1 Application

      AMI 7.1.1

      This Chapter applies to an Authorised Market Institution and an applicant for a Licence to be an Authorised Market Institution.

      AMI 7.2 Licensing requirements

      AMI 7.2 Guidance

      This section sets out the Licensing Requirements which an Authorised Market Institution must meet in order to be licensed and to commence its operations.

      AMI 7.2.1

      (1) An Authorised Market Institution must be able to satisfy the Licensing Requirements to the satisfaction of the DFSA at the time a Licence is granted and at all times thereafter.
      (2) The Licensing Requirements referred to in (1) are set out in this section and contain requirements relating to:
      (a) fitness and propriety;
      (b) proper markets;
      (c) financial resources;
      (d) human and technology resources;
      (e) systems and controls;
      (f) Members' access to facilities;
      (g) general safeguards for investors;
      (h) identification, deterrence and prevention of Market Misconduct, financial crime and Money laundering
      (i) promotion and maintenance of standards;
      (j) whistle blowing;
      (k) clearing and settlement;
      (l) Transaction recording;
      (m) safeguarding and administration of assets;
      (n) business rules;
      (o) compliance with business rules;
      (p) complaints; and
      (q) default rules.

      Fit and proper - constitution, Regulation and governance

      AMI 7.2.2

      (1) An Authorised Market Institution must:
      (a) be fit and proper;
      (b) be appropriately constituted; and
      (c) have taken appropriate measures to:
      (i) satisfy the Licensing Requirements; and
      (ii) perform its Regulatory Functions.
      (2) In particular, the Governing Body must:
      (a) demonstrate integrity, competence and commitment to satisfying its obligations under the Licensing Requirements;
      (b) assign Key Individuals with appropriate levels of experience, knowledge and qualifications to oversee the Regulatory Functions;
      (c) appoint a Key Individual who is ordinarily resident in the United Arab Emirates as a Money Laundering Reporting Officer;
      (d) have independent Directors constituting at least one-half of the total number of Directors in the Governing Body and ensure that these independent Directors are provided with direct access to:
      (i) Key Individuals when required; and
      (ii) all relevant information concerning the satisfaction of Licensing Requirements and the performance of Regulatory Functions; and
      (e) ensure that Key Individuals have unfettered, direct access to the Governing Body.
      (3) For the purposes of this rule and Article 23(1)(f)(ii) of the Markets Law 2004, Regulatory Functions are those functions of an Authorised Market Institution which contribute directly to the satisfaction by the Authorised Market Institution of a Licensing Requirement.

      AMI 7.2.2 Guidance

      In determining whether an Authorised Market Institution has satisfied this Licensing Requirement, the DFSA will consider, in addition to those matters set out in App1:

      a. its arrangements, policies and resources for fulfilling its obligations under the Licensing Requirements;
      b. the extent to which its constitution and organisation provide for effective governance;
      c. the arrangements made to ensure that the Governing Body has effective oversight of its Regulatory Functions;
      d. the access the Key Individuals have to the Governing Body;
      e. the size and composition of the Governing Body including:
      i. the number of independent Directors in the Governing Body;
      ii. the number of Members of the Governing Body who represent Members of the Authorised Market Institution or other persons and the types of Person whom they represent; and
      iii. the number and responsibilities of any Members of the Governing Body with executive roles within the Authorised Market Institution.
      f. the structure and organisation of its Governing Body including any distribution of responsibilities among its Members and committees;
      g. the integrity and competence of its Key Individuals;
      h. its arrangements for ensuring that it employs individuals who are honest and demonstrate integrity; and
      i. the independence of its regulatory department from its commercial departments.

      Proper markets

      AMI 7.2.3

      An Exchange must have systems, policies and procedures which ensure that only Investments in which there is a proper market are traded on its facilities. For a proper market to exist:

      (a) arrangements must be in place for relevant market information to be made available to Persons engaged in dealing;
      (b) Investments must serve an economic purpose;
      (c) there must be a sufficient range and number of investors willing and able to generate sufficient supply and demand in the Investments;
      (d) where appropriate, there must be a sufficiently liquid underlying cash market;
      (e) where appropriate, there must be capacity to make and take delivery of the Investments; and
      (f) the Business Rules of an Exchange must allow for the discontinuance or suspension of trading in Investments when disclosure obligations have not been complied with and in other appropriate circumstances.

      AMI 7.2.3 Guidance

      1. Before admitting to trading status Securities listed in jurisdictions elsewhere, or any other type of Investment such as a Derivative product or an unlisted Security, the Exchange should consider the following factors to determine whether a proper market exists in that Investment:
      a. any restrictions whether legal or physical on Persons who may hold the Investment;
      b. the liquidity or anticipated liquidity of the Investment;
      c. the economic rationale for admitting the Investment to trading;
      d. whether there is sufficient relevant information available to allow market participants to make an informed judgement on the value of assets and underlying assets;
      e. how the information required by market participants to make an informed assessment of the value of the Investment is accessed; and
      f. whether there are adequate settlement and delivery procedures in relation to the Investment.
      2. Where the value of the Investment relates to an underlying asset or assets, each of the considerations in 2 should be considered as applicable to the underlying asset to ensure a proper market can exist enabling the Investment to be admitted to trading status. However, there may be a proper market in an Investment, even if there are reasons for there not being a proper market in the underlying assets.
      3. The DFSA also considers that there will usually be a proper market for an unlisted Security which as a condition of the admittance to trading requires the Issuer to comply with initial and continuing obligations comparable to those for offers of Securities in or from the DIFC.
      4. In determining whether Material Information is disclosed to allow investors to make an informed judgement of the value of the Investment, the DFSA may consider the extent to which persons can obtain information about Investments through acceptable channels of communication such as through third party information vendors. Where there is no alternative way to obtain information about an Investment, the Exchange will need to provide those services.

      Financial resources

      AMI 7.2.4

      (1) An Authorised Market Institution must have and maintain at all times, in addition to the minimum financial resource requirement in (2), financial resources of a type acceptable to the DFSA which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due
      (2) The minimum financial resource requirement for an Authorised Market Institution is:
      (a) an amount equal to one half of the estimated gross operating costs of the Authorised Market Institution for the next twelvemonth period; and
      (b) such other base capital amount as may be set by the DFSA under (4).
      (3) When calculating its twelve-month gross operation costs, an Authorised Market Institution must also include any penalty payments for which it has become liable as part of any outsourcing or other arrangements which are integral it is being able to function as an Authorised Market Institution.
      (4) The DFSA may prescribe a base capital amount for an Authorised Market Institution and will determine such amount by reference to other international jurisdictions deemed by the DFSA to be comparable.
      (5) An Authorised Market Institution must have systems and controls to enable it to determine and monitor whether its financial resources are sufficient for the purposes of the additional financial resource requirement in (1) and the minimum financial resource requirement in (2).
      (6) For the purposes of (5), the systems and controls must take into account the following factors with any others that are appropriate to its operations model:
      (a) the scale, nature and activities of the operation;
      (b) the operational, Counterparty, market and settlement risks to which the body is exposed;
      (c) the amount and composition of its available financial resources; and
      (d) its access to additional financial resources if required.

      AMI 7.2.4 Guidance

      1. The financial resource requirement is intended to ensure that an Authorised Market Institution not only has sufficient financial resources to meet its liabilities as they fall due, but also to allow, if circumstances require, for the orderly wind-down of the Authorised Market Institution's business, while still allowing the institution to meet the conditions of its Licence.
      2. The systems and controls should be such as to enable an assessment of the financial resources required to be conducted periodically or after any significant change or event, whether internal or external, to the Authorised Market Institution, which may require re-assessment. This regular re-assessment is necessary to satisfy the DFSA that the Licensing Requirements are being satisfied on an ongoing basis and the DFSA will often request to see the conclusions.
      3. In determining whether to set a base capital amount the DFSA will take into account the risks that the Authorised Market Institution poses to the DIFC market and products which it intends, or is, trading, clearing or settling.

      Human and technology resources

      AMI 7.2.5

      (1) An Authorised Market Institution must have sufficient human and independent technology resources to operate and supervise its facilities.
      (2) An Authorised Market Institution must ensure, as far as reasonably practical, that its staff are:
      (a) fit and proper;
      (b) appropriately trained for the duties they perform; and
      (c) trained in the requirements of the legislation applicable in the DIFC.
      (3) The Authorised Market Institution must satisfy the DFSA that its technology resources are established and maintained in such a way as to ensure that they are secure and maintain the confidentiality of the data they contain.

      AMI 7.2.5 Guidance

      1. In assessing an Authorised Market Institution's systems and controls used to operate and carry on its functions, the DFSA recognises that an Authorised Market Institution is likely to have significant reliance on its information technology systems. In assessing the adequacy of these systems, the DFSA will consider:
      a. the organisation, management and resources of the information technology department of the Authorised Market Institution;
      b. the arrangements for controlling and documenting the design, development, implementation and use of technology systems; and
      c. the performance, capacity and reliability of information technology systems.
      2. The DFSA shall also, during its assessment of technology systems, have regard to the:
      a. procedure for the evaluation and selection of information technology systems;
      b. procedures for problem management and system change;
      c. arrangements for testing information technology systems before live operations;
      d. arrangements to monitor and report system performance, availability and integrity;
      e. arrangements made to ensure information technology systems are resilient and not prone to failure;
      f. arrangements made to ensure business continuity in the event that an information technology system fails;
      g. arrangements made to protect information technology systems from damage, tampering, misuse or unauthorised access;
      h. arrangements made to ensure the integrity of data forming part of, or being processed through, information technology systems; and
      i. any third party outsourcing arrangements.

      Systems and controls

      AMI 7.2.6

      (1) An Authorised Market Institution must ensure that its systems and controls are adequate and suitable for the performance of its functions and appropriate to the scale and nature of its operations. In particular, systems and controls should exist in relation to:
      (a) the transmission of information to users of its facilities;
      (b) the assessment and management of risks including conflicts of interest;
      (c) the operation of its functions;
      (d) the safeguarding and administration of assets belonging to its users; and
      (e) the fitness and propriety of its Employees and the adequacy of its technology resources.
      (2) An Exchange must also have systems and controls in relation to the supervision and monitoring of transactions on its facilities.
      (3) An Authorised Market Institution must undertake regular reviews of its systems and controls.

      AMI 7.2.6 Guidance

      1. The Systems and Controls Licensing Requirement exists in addition to the requirements of GEN chapter 5.
      2. In assessing an Authorised Market Institution's systems and controls for the transmission of information, the DFSA will consider to the extent to which these systems and controls ensure the information is transmitted promptly and accurately:
      a. within the Authorised Market Institution itself;
      b. to Members; and
      c. where appropriate, to other market participants or other persons including the DFSA.
      3. In assessing an Authorised Market Institution's systems and controls for assessing and managing risk, the DFSA may also have regard to the extent to which these systems and controls enable the Authorised Market Institution to:
      a. identify all the general, operational, legal and market risks wherever they arise in its activities;
      b. measure and control the different types of risk;
      c. allocate responsibility for risk management to persons with appropriate levels of knowledge and expertise; and
      d. provide sufficient, reliable information to Key Individuals and, where relevant, the Governing Body of the Authorised Market Institution.
      4. Where the Clearing House assumes Counterparty risk, the DFSA will consider:
      a. the position and role of the risk management department within the Clearing House;
      b. the frequency with which exposures and risks are monitored against limits or other control parameters and the frequency with which these parameters are reviewed;
      c. the reliability and robustness of intra-day monitoring and Counterparty risk management;
      d. the arrangements for calculating, collecting and holding margin payments and the allocation of losses; and
      e. arrangements for stress testing the risk model in unusual market conditions and in Recognition of the amount of Capital Resources maintained by the Clearing House to cover its Exposure which may arise, for example, with substantial movements in market values or Counterparty defaults.
      5. An Authorised Market Institution should have proper procedures and policies to allocate responsibility for regulatory decisions so that it can take proper regulatory decisions notwithstanding any conflicts of interest arising from the performance of its regulatory functions and commercial objectives. The policies and procedures should include:
      a. policies on the use of confidential information received in carrying out its Regulatory Functions and to ensure it is only used for proper purposes;
      b. arrangements for transferring decisions or responsibilities to alternates in individual cases; and
      c. arrangements made to ensure that individuals who may have a permanent conflict of interest in certain circumstances are excluded from the process of taking decisions (or receiving information) about matters in which the conflict is relevant.
      6. In assessing an Authorised Market Institution's systems and controls for the safeguarding and administration of assets belonging to users of the facilities, the DFSA will consider:
      a. records of the assets held and the identity of the owners of (and other persons with relevant rights over) those assets;
      b. records of any instructions given in relation to those assets;
      c. records of the carrying out of those instructions;
      d. records of any movements in those assets (or any corporate actions or other events in relation to those assets); and
      e. how an Authorised Market Institution reconciles its records of assets held with the records of any custodian or sub-custodian used to hold those assets, and with the record of beneficial or legal ownership of those assets.
      7. In assessing an Exchange's systems and controls for the effecting and monitoring of transactions, the DFSA will consider the arrangements under which:
      a. orders are received and matched;
      b. transactions are reported;
      c. relevant information is transmitted to a clearing house; and
      d. conduct that may amount to Market Misconduct is identified using surveillance systems.

      Members' access to facilities

      AMI 7.2.7

      An Authorised Market Institution must restrict access to its facilities to persons:

      (a) who, if performing a Financial Service in or from the DIFC, are Authorised Firms or Authorised Market Institutions or DFSA Recognised Bodies; and
      (b) on the basis of criteria which have been approved by the DFSA and which are designed to protect the orderly functioning of its facilities and the interests of investors.

      AMI 7.2.7 Guidance

      1. In assessing the criteria used by an Authorised Market Institution to permit access to its facilities, the DFSA will consider:
      a. whether its Business Rules can be enforced contractually over persons granted access to its facilities;
      b. whether the criteria is objective and applied in a non-discriminatory manner;
      c. if the persons granted access to the facilities are subject to training, competence and experience checks;
      d. how electronic access is approved and the measures taken to prevent or resolve problems which would arise from the failure of this access; and
      e. the financial resource requirements for those not authorised by the DFSA.
      2. In assessing how electronic access is approved, the DFSA will consider:
      a. the rules and Guidance governing persons procedures, controls and Security arrangements for inputting instructions into the system;
      b. the rules and Guidance governing facilities offered to third persons for inputting instructions into the system and restrictions placed on the use of those systems;
      c. the rules and practices to detect, identify and halt or remove instructions breaching any relevant instructions; and
      d. the quality and completeness of the audit trail of any Transaction processed through an electronic connection system.

      General safeguards for investors

      AMI 7.2.8

      An Authorised Market Institution must have Business Rules, procedures and an effective surveillance program that:

      (a) ensures that business conducted on or through its facilities is conducted in an orderly manner so as to afford proper protection to investors; and
      (b) monitors for conduct which may amount to Market Misconduct, financial crime or Money Laundering.

      AMI 7.2.8 Guidance

      1. To satisfy the DFSA that rule 7.2.8(a) is met, an Authorised Market Institution should have rules and procedures in place for:
      a. preventing and detecting the use of its facilities for abusive, improper or fraudulent purposes;
      b. preventing the improper, reckless or negligent use of its facilities; and
      c. allowing users to raise queries about business conducted on or through the facilities.
      2. Abusive, improper and fraudulent purposes include:
      a. trades in which a party is improperly indemnified against losses;
      b. trades intended to create a false appearance of trading activity;
      c. pre-arranged or pre-negotiated trades;
      d. trades which one party does not intend to close out or settle;
      e. conduct which is likely to result in disorderly trading in the market; and
      f. any contravention of Part 8 of the Market Misconduct provisions of the Markets Law 2004.
      3. An Authorised Market Institution must have an effective surveillance system in place for:
      a. the coordinated surveillance of all activity on or through its facilities and activity in Related Investments conducted elsewhere; and
      b. communicating information about Market Misconduct to the DFSA or appropriate regulatory authorities.
      4. In determining whether an Exchange is ensuring that business conducted on its facilities is conducted in an orderly manner the DFSA will consider:
      a. arrangements for pre and post trade transparency taking into account the nature and liquidity of the Investments traded; and
      b. the need to provide anonymity for trading participants.
      5. An Exchange will also have appropriate procedures allowing it to influence trading conditions, suspend trading promptly when required, and to support or encourage liquidity when necessary to maintain an orderly market. The DFSA will consider the transparency of such procedures and the fairness of their application and potential application.
      6. In addition, Members should be able to satisfy any other legal obligations they may have and the obligations to Clients that may exist under the Conduct of Business Rules.
      7. In pursuit of the detection and prevention of Market Misconduct and financial crime, an Authorised Market Institution should communicate information promptly and accurately to the DFSA and other appropriate organisations under the Guidance of the DFSA. An Authorised Market Institution should also co-operate with the DFSA and such organisations in any ensuing investigation. If an Authorised Market Institution has concerns about sharing such information it should seek Guidance and act on instructions from the DFSA.
      8. An Authorised Market Institution shall have regard to Part 8 of the Markets Law in relation to Market Misconduct and the relevant provisions of the Regulatory Law.

      Market Misconduct, financial crime and Money laundering

      AMI 7.2.9

      An Authorised Market Institution must:

      (a) operate appropriate measures to identify, deter and prevent Market Misconduct, financial crime and Money Laundering on and through the Authorised Market Institution's facilities; and
      (b) report to the DFSA any Market Misconduct, financial crime and Money Laundering.

      AMI 7.2.9 Guidance

      1. In determining whether an Authorised Market Institution's measures are appropriate to reduce the extent to which its facilities can be used for Market Misconduct, financial crime or Money Laundering, the DFSA will consider:
      a. whether the Authorised Market Institution has appropriate staff, surveillance systems, resources and procedures for this purpose;
      b. the monitoring conducted for possible patterns of normal, abnormal or improper use of those facilities;
      c. how promptly and accurately information is communicated about Market Misconduct, financial crime and Money Laundering to the DFSA and other appropriate organisations;
      d. how the Authorised Market Institution co-operates with relevant bodies in the prevention, investigation and pursuit of Market Misconduct, financial crime and Money laundering; and
      e. whether the Authorised Market Institution is able to demonstrate that it can comply with the applicable DIFC Laws and Rules and in particular:
      i. the Markets Law 2004;
      ii. the Regulatory Law 2004;
      iii. the Federal Law No. 4 of 2002 "Criminalisation of Money Laundering" of the United Arab Emirates; and
      iv. the Law Regulating Islamic Financial Business.
      2. An Authorised Market Institution is also subject to the anti Money Laundering requirements in chapter 11.

      Promotion and maintenance of standards

      AMI 7.2.10

      An Authorised Market Institution must be able and willing to:

      (a) promote and maintain high standards of integrity and fair dealing in the carrying on of business on or through its facilities; and
      (b) co-operate with the DFSA or other appropriate regulatory authorities with regard to regulatory matters when required.

      AMI 7.2.10 Guidance

      1. In determining whether an Authorised Market Institution is able and willing to promote high standards of integrity and fair dealing, the DFSA will consider:
      a. the extent to which an Authorised Market Institution seeks to promote and encourage such standards through its rules, procedures and practices;
      b. the extent to which Members are required to, and do, adhere to such standards; and
      c. any other applicable Rules and principles which apply to the carrying on of business on or through its facilities.
      2. In assessing the ability and willingness of an Exchange to co-operate with the DFSA and other regulatory authorities, the DFSA will consider:
      a. the agreements in place between Persons granted access to the facilities and the relevant Authorised Market Institution for sharing information, such as information regarding large open positions; and
      b. how diligently the Authorised Market Institution responds to enquiries from the DFSA or other regulatory authorities.

      Whistle blowing

      AMI 7.2.11

      An Authorised Market Institution must have appropriate procedures and protections for allowing Employees to disclose any information to the DFSA or other appropriate bodies involved in the prevention of Market Misconduct, financial crime or Money Laundering.

      Clearing and settlement

      AMI 7.2.12

      (1) An Exchange must ensure that satisfactory arrangements are in place for securing the timely discharge of the rights and liabilities of the parties to transactions conducted on or through its facilities.
      (2) A Clearing House that conducts clearing services must ensure those services include satisfactory arrangements for securing the timely discharge of the rights and liabilities of the parties to transactions for which it provides such services.
      (3) A Clearing House that conducts settlement services must ensure those services include satisfactory arrangements for securing the timely discharge of settlement obligations of the parties to transactions for which it provides such services.

      AMI 7.2.12 Guidance

      In determining whether rule 7.2.12 is satisfied, the DFSA will consider the Authorised Market Institution's:

      a. rules, procedures and practices relating to clearing and settlement;
      b. arrangements for matching trades and ensuring that the parties are in agreement about trade details;
      c. arrangements for making deliveries and payments and, where relevant, for collecting margin and holding Collateral, in all relevant jurisdictions;
      d. procedures to detect and deal with the failure of settlement in accordance with its rules;
      e. arrangements for taking action to settle if settlement does not take place in accordance with its rules;
      f. arrangements for monitoring settlement performance; and
      g. default rules and default procedures.

      Transaction recording

      AMI 7.2.13

      An Authorised Market Institution must ensure that satisfactory arrangements are made for:

      (a) recording the activity and transactions effected on its facilities;
      (b) maintaining the activity and Transaction records for at least 6 years; and
      (c) providing the DFSA with these records in a timely manner if required by the DFSA.

      AMI 7.2.13 Guidance

      1. The type of information that requires recording will vary according to the activity and type of transactions conducted on or through the facilities of the Authorised Market Institution.
      2. In general, for an Exchange, the type of information which should be recorded will include:
      a. the name of the relevant Investment and the price, quantity and date of the transaction;
      b. the order type, time of instruction and expiry date;
      c. the identities and, where appropriate, the roles of the counter parties to the transaction;
      d. the facilities on which the Transaction was effected and is to be cleared and settled; and
      e. the date and manner of settlement of the Transaction.
      3. In general, for a Clearing House, the type of information which should be recorded will include:
      a. the name of the relevant Investment and the price, quantity and date of the transaction;
      b. the identities and, where appropriate, the roles of the counter parties to the transaction;
      c. the facilities on which the Transaction was effected and is to be cleared;
      d. (where applicable) time novation takes place; and
      e. the date and manner of settlement of the Transaction.

      Safeguarding and administration of assets

      AMI 7.2.14

      An Authorised Market Institution must ensure that where its facilities include making provision for the safeguarding and administration of assets belonging to users of those facilities:

      (a) satisfactory arrangements are made for that purpose; and
      (b) clear terms of agreement exist between the users of the facility and the Authorised Market Institution.

      AMI 7.2.14 Guidance

      In determining whether the Authorised Market Institution has made satisfactory arrangements for safeguarding and administering assets, the DFSA will consider:

      a. the terms of any agreement;
      b. the level of protection provided to users against the risk of theft, fraud, defalcation or other types of loss;
      c. whether the arrangements ensure that assets are only transferred with instructions of the owners of the assets or under the terms of the agreement and in accordance with any applicable law;
      d. whether an investor's assets are adequately segregated from assets belonging to the Authorised Market Institution and other users of the facilities;
      e. the frequency of reconciliation between the assets and accounts which are being administered;
      f. whether the records kept of those assets and the operating of the safeguarding services provide sufficient accurate and timely information:
      i. to identify the legal and beneficial owners of assets and of any persons who have Charges over or other interests in the assets;
      ii. to record separately any additions, reductions and transfers in each account of assets held for safeguarding or administration; and
      iii. to identify separately the assets owned by (or where appropriate on behalf of) different persons, including, where appropriate, the assets owned by persons granted access to the facilities of an Authorised Market Institution and their Clients.
      g. the frequency with which statements of their holdings are provided to users of the services, to the owners of assets held, and to other appropriate persons in accordance with the terms of agreement; and
      h. whether the arrangements include satisfactory procedures for the selection and oversight of any custodians or sub-custodians used in the safeguarding and administering of assets.

      Business rules

      AMI 7.2.15

      An Authorised Market Institution must have clear and fair Business Rules which are legally enforceable against its Members, published and made freely available.

      AMI 7.2.15 Guidance

      The Business Rules should not include or approve any restrictive practices which may prevent effective competition for business in Investments.

      Compliance with business rules

      AMI 7.2.16

      (1) An Authorised Market Institution must have compliance procedures in place to ensure:
      (a) its Business Rules are monitored and enforced;
      (b) complaints regarding Persons granted access to its facilities are investigated;
      (c) appeal procedures are in place; and
      (d) where appropriate, disciplinary action resulting in financial and other types of penalties is available.
      (2) An Exchange must have arrangements for monitoring compliance with its Business Rules in relation to the provision of clearing and settlement services in respect of transactions effected by its facilities.

      AMI 7.2.16 Guidance

      1. In determining whether an Authorised Market Institution can effectively monitor its Business Rules, the DFSA will consider:
      a. the oversight of activity conducted on its facilities;
      b. the range of powers it retains over Persons granted access to its facilities, which should include the ability to modify, revoke or suspend access; and
      c. the disciplinary procedures which have been established to take disciplinary action, including a fair and clear policy on any financial penalties which may be imposed, and the appeal processes.
      2. In determining whether an Authorised Market Institution can effectively oversee the activities conducted on its facilities the DFSA will consider how non-compliance is identified and how the significance of any non-compliance is assessed.

      Complaints

      AMI 7.2.17

      (1) An Authorised Market Institution must have effective arrangements in place for the investigation and resolution of complaints made against it.
      (2) An Authorised Market Institution must establish and maintain a register of complaints made against it and their resolution. Records of the complaints must be maintained for a minimum of six years.

      AMI 7.2.17 Guidance

      1. Procedures should be in place to acknowledge a complaint promptly, for making an objective consideration of the complaint and for a timely response to be sent to the complainant. The response should inform the complainant that, if he is not satisfied with the response, he should contact the DFSA.
      2. Complaints should be impartially investigated by a Person not involved in the conduct about which the complaint has been made. At the conclusion of the investigation a report should be prepared and provided to the relevant Key Individuals.
      3. GEN chapter 5 also imposes requirements on Authorised Market Institutions in relation to complaints.

      Default rules

      AMI 7.2.18

      An Authorised Market Institution must have Default Rules which in the event of a Member being, or appearing to be, unable to meet his obligations in respect of one or more contracts, enables action to be taken in respect of unsettled market contracts to which the Member is party.

      AMI 7.2.18 Guidance

      The DFSA requires all Authorised Market Institutions to have Default Rules under Article 11 of the Markets Law 2004. Default Rules allow an Authorised Market Institution to close-out open positions by discharging the appropriate rights and liabilities of transactions which a Person granted access to its facilities can not, or may not, be able to fulfil.

      AMI 7.3 Reports

      7.3.1

      For the purposes of Article 74(2) of the Regulatory Law 2004, an Authorised Market Institution must deliver to the DFSA a report in writing at such times as the DFSA may direct addressing those matters contained in Article 74(2)(a)-(d) and such other matters as the DFSA may reasonably require.

      AMI 8 Ongoing Obligations of an Authorised Market Institution

      AMI 8.1 General obligations

      AMI 8.1.1

      An Authorised Market Institution Licensed to operate an Exchange must at all times do all things necessary to ensure that its market is fair, orderly and efficient.

      AMI 8.1.2

      An Authorised Market Institution Licensed to operate a Clearing House must at all times do all things necessary to ensure that its facilities are operated in a fair and efficient way and which reduces systemic risk.

      AMI 9 Amendments to Business Rules

      AMI 9.1 Amendments

      AMI 9.1.1

      (1) Any amendment to an Authorised Market Institution's Business Rules must, prior to the amendment being effective, be:
      (a) available for market consultation; and
      (b) approved by the DFSA.
      (2) In urgent cases, the DFSA may, on written application by the Authorised Market Institution, dispense with the requirement in (1)(a).

      AMI 9.1.2

      An Authorised Market Institution must have procedures for notifying users of these changes.

      AMI 9.1.2 Guidance

      1. Amendments include the introduction of new Business Rules as well as changes to existing Business Rules.
      2. Any Business Rules consultation should include:
      a. informal discussions at an early stage with users of the facilities and appropriate representative bodies;
      b. publication of a formal consultation paper which includes clearly expressed reasons for the changes and an appropriately detailed assessment of the likely costs and benefits;
      c. adequate time for users of its facilities to respond to the consultation paper and for the Authorised Market Institution to take responses properly into account;
      d. adequate arrangements for making responses to the consultation available for inspection by users of its facilities unless the respondent requests otherwise;
      e. adequate arrangements for ensuring that the Authorised Market Institution has proper regard to the comments received; and
      f. publication, no later than the publication of the amended rules, of a reasoned account of the Authorised Market Institution's decision to amend its rules.
      3. The DFSA expects that an Authorised Market Institution will submit proposed changes at least 28 days before the proposed effective date. Furthermore, when submitting amendments of the Business Rules to the DFSA, the Authorised Market Institution will need to:
      i. set out the text of the amendment (including a marked-up version for comparison);
      ii. provide an explanation for the amendment; and
      iii. provide the DFSA with the proposed effective date.
      4. In urgent cases, the DFSA may dispense with the requirement for market consultation but still requires the Authorised Market Institution to seek approval prior to making any amendment effective.

      AMI 10 Supervision of Authorised Market Institutions

      AMI 10.1 Relations with regulators

      AMI 10.1.1

      An Authorised Market Institution must deal with regulatory authorities in an open and co-operative manner and keep the DFSA promptly informed of significant events or anything else relating to the Authorised Market Institution of which the DFSA would reasonably expect to be notified in relation to activities wherever they are carried on.

      AMI 10.1.2

      An Authorised Market Institution must advise the DFSA immediately it becomes aware, or has reasonable grounds to believe, that a significant breach of a Licensing Requirement by the Authorised Market Institution or any of its Employees may have occurred or may be about to occur.

      AMI 10.2 Notifications

      AMI 10.2 Guidance

      An Authorised Market Institution must make notifications as required by SUP 7. This section requires additional notifications to be made. The additional notifications required by this section are specific to Authorised Market Institutions rather than the more general notifications contained elsewhere. The notifications are not exhaustive and an Authorised Market Institution should consider the requirements imposed upon it by rule 9.1.2.

      AMI 10.2.1

      Unless otherwise provided, notifications in this section may be made orally or in writing, whichever is more appropriate in the circumstances, but where the Authorised Market Institution gives notice or information orally, it must confirm that notice or information in writing without delay.

      AMI 10.3 Key Individuals and regulatory functions

      AMI 10.3.1

      Where an individual becomes or ceases to be a Key Individual of an Authorised Market Institution, that Authorised Market Institution must immediately give written notice to the DFSA of that event setting out the following information:

      (a) where an individual has been appointed or elected as a Key Individual:
      (i) that individual's name;
      (ii) his date of birth;
      (iii) a description of the responsibilities which he will have in the position to which he has been appointed or elected;
      (iv) the relevant experience and qualifications of the individual; or
      (b) where an individual has resigned as or otherwise ceased to be a Key Individual, that individual's name and the date of resignation or other form of cessation

      AMI 10.3.1 Guidance

      The DFSA does not need to be notified where minor changes are made to the responsibilities of a Key Individual, but where a major changes in responsibilities is made which amounts to a new appointment or a significant re-alignment of responsibilities, the DFSA should be notified with the appropriate information.

      Disciplinary action and events relating to Key Individuals or directors

      AMI 10.3.2

      Where any Key Individual or Director of an Authorised Market Institution:

      (a) is the subject of any:
      (i) disciplinary action arising out of alleged misconduct; or
      (ii) criminal prosecution arising out of alleged misconduct involving fraud or dishonesty;
      (b) resigns as a result of an investigation into alleged misconduct; or
      (c) is dismissed for misconduct;
      the Authorised Market Institution must immediately give the DFSA notice of that event and give the following information
      (d) the name of the Key Individual or Director and his responsibilities within the Authorised Market Institution;
      (e) details of the alleged acts of misconduct by that Key Individual or Director;
      (f) details of any disciplinary action which has been imposed or is proposed to be taken by that body in relation to that Key Individual or Director.

      AMI 10.3.3

      Where an Authorised Market Institution becomes aware that any of the following events have occurred in relation to a Key Individual or Director, it must immediately give the DFSA notice of that event:

      (a) a petition of bankruptcy is presented against that Key Individual or Director;
      (b) a bankruptcy order is made against him; and
      (c) he enters into a voluntary arrangement with his creditors.

      AMI 10.4 Constitution and governance

      AMI 10.4.1

      Where an Authorised Market Institution is to circulate any notice or other document proposing any amendment to its memorandum or articles of association, or other document relating to its constitution, to:

      (a) its shareholders or any Group or Class of them;
      (b) persons granted access to its facilities or any Group or Class of them ; or
      (c) any other Group or Class of persons which has the power to make that amendment or whole consent or approval is required before it may be made:
      that Authorised Market Institution must give notice of that proposed amendment to the DFSA setting out the following information:
      (d) the proposed amendment;
      (e) the reasons for the proposal; and
      (f) a description of the Group or Class of persons to whom the proposal is to be circulated.

      AMI 10.4.2

      Where an Authorised Market Institution makes an amendment to its memorandum or articles of association, or other document relating to its constitution, that Authorised Market Institution must immediately give the DFSA notice of that event, setting out written particulars of that amendment and of the date on which it is to become or became effective.

      AMI 10.4.3

      Where any change is made to an agreement which relates to the constitution or governance of an Authorised Market Institution that Authorised Market Institution must give the DFSA notice of that event as soon as it is aware of it, and give written particulars of the date on which it is to become or became effective.

      AMI 10.4.3 Guidance

      The purpose of these notifications is to ensure the DSFA is informed of changes to arrangements which specify the arrangements by which an Authorised Market Institution will be governed or by which important decisions will be taken within that body.

      AMI 10.5 Financial and other information

      AMI 10.5.1

      An Authorised Market Institution must give the DFSA:

      (a) a copy of its annual report and accounts; and
      (b) a copy of any consolidated annual report and accounts of any Group of which the Authorised Market Institution is a Member;
      no later than when the first of the following events occurs:
      (c) four months after the end of the financial year to which the document relates;
      (d) the time when the documents are sent to Persons granted access to the facilities or shareholders of the Authorised Market Institution; or
      (e) the time when the document is sent to a Holding Company of the Authorised Market Institution

      AMI 10.5.2

      Where an audit committee of an Authorised Market Institution has received a report in relation to any period or any matter relating to any Regulatory Functions of that Authorised Market Institution, the Authorised Market Institution must immediately give the DFSA a copy of that report.

      AMI 10.5.3

      An Authorised Market Institution must give the DFSA a copy of its quarterly management accounts within one month of the end of the period to which they relate.

      AMI 10.5.4

      An Authorised Market Institution must give the DFSA:

      (a) a statement of its anticipated income, expenditure and cash flow for each financial year; and
      (b) an estimated balance sheet showing its position as it is anticipated at the end of each financial year;
      before the beginning of that financial year.

      AMI 10.5.4 Guidance

      An Authorised Market Institution is subject to GEN 8 and the requirements imposed by those Rules.

      Fees and charges

      AMI 10.5.5

      An Authorised Market Institution must give the DFSA a summary of:

      (a) any proposal for changes the Fees or Charges levied on users of its facilities, or any Group or Class of then, at the same time as the proposal is communicated to the relevant users; and
      (b) any such change, no later than the date when it is published and notified to relevant parties.

      AMI 10.6 Complaints

      AMI 10.6.1

      Where an Authorised Market Institution has investigated a complaint arising in connection with the performance of, or failure to perform any of its Regulatory Functions, and the conclusion is that the Authorised Market Institution should:

      (a) make a compensatory payment to any person; or
      (b) remedy the matter which was the subject of that complaint
      the Authorised Market Institution must immediately notify the DFSA of that event and give the DFSA a copy of the report and particulars of the recommendation as soon as that report or those recommendations are available to it.

      AMI 10.7 Notification in respect of trading

      AMI 10.7.1

      Where an Authorised Market Institution Licensed to be Operating an Exchange proposes to remove from trading or admit to trading, by means of its facilities a Class of Investment which it has not previously traded, but is Licensed to do so, it must give the DFSA notice of that event, at the same time as the proposal is communicated to persons granted access to its facilities or shareholder, with the following information;

      (a) a description of the Investment to which the proposal relates;
      (b) where that Investment is a Derivative product, the proposed terms of that derivative; and
      (c) the name of any clearing or settlement facility in respect of that Investment.

      AMI 10.7.2

      Where an Authorised Market Institution Licensed to be Operating a Clearing House proposes to cease clearing or settling, or to clear or settle by means of its facilities a Class of Investment which it has not previously traded, but is Licensed to do so, it must give the DFSA notice of that event, at the same time as the proposal is communicated to persons granted access to its facilities or shareholder, with the following information;

      (a) a description of the Investment to which the proposal relates;
      (b) where that Investment is a Derivative product, the proposed terms of that derivative; and
      (c) the name of any trading facility in respect of that Investment.

      AMI 10.8 Information technology systems

      AMI 10.8.1

      Where an Authorised Market Institution changes any of its plans for action in response to a failure of any of its information technology systems resulting in disruption to the operation of its facilities, it must immediately give the DFSA notice of that event, and a copy of the revised or new plan.

      AMI 10.8.2

      Where any reserve information technology system of an Authorised Market Institution fails in such a way that, if the main information technology system of that body were also to fail, it would be unable to operate any of its facilities during its normal hours of operation, that body must immediately give the DFSA notice of that event, and inform the DFSA of:

      (a) what action that Authorised Market Institution is taking to restore the operation of the reserve information technology system; and
      (b) when it is expected that the operation of that system will be restored.

      Inability to discharge regulatory functions

      AMI 10.8.3

      Where, because of the occurrence of any event or circumstances, an Authorised Market Institution is unable to discharge any Regulatory Function, it must immediately give the DFSA written notice of its inability to discharge that function, and inform the DFSA of:

      (a) what event or circumstance has caused it to become unable to do so;
      (b) which of its Regulatory Functions it is unable to discharge; and
      (c) what action, if any, it is taking or proposes to take to deal with the situation and, in particular, to enable it to recommence discharging that Regulatory Function.

      AMI 10.9 Investigations and disciplinary action

      AMI 10.9.1

      Where an Authorised Market Institution becomes aware that a Person other than the DFSA has been appointed by any regulatory authority to investigate:

      (a) any business transacted on or through its facilities; or
      (b) any aspect of the clearing or settlement services which it provides
      it must immediately give the DFSA notice of that event.

      AMI 10.9.1 Guidance

      An Authorised Market Institution need not give the DFSA notice of:

      a. routine inspections or visits undertaken in the course of regular monitoring, complaints handling or as part of a series of theme visits;
      b. routine requests for information; or
      c. investigations into the conduct of Persons granted access to the facilities of an Authorised Market Institution where the use of its facilities is a small or incidental part of the subject matter of the investigation.

      Disciplinary action relating to persons granted access to its facilities

      AMI 10.9.2

      Where an Authorised Market Institution has taken disciplinary action against a Person granted access to its facilities, or any Employee of such Person, in respect of a breach of its Business Rules the Authorised Market Institution must immediately notify the DFSA of that event, and give:

      (a) the name of the Person concerned;
      (b) details of the disciplinary action taken by the Authorised Market Institution; and
      (c) the Authorised Market Institution's reasons for taking that disciplinary action.

      AMI 10.9.3

      Where an appeal is lodged against any disciplinary action referred to in rule 10.2.21, the Authorised Market Institution must immediately give the DFSA notice of that event and:

      (a) the name of the appellant and the grounds on which the appeal is based, immediately; and
      (b) the outcome of the appeal, when known.

      Criminal offences and civil prohibition

      AMI 10.9.4

      Where an Authorised Market Institution has information tending to suggest that any Person has:

      (a) been carrying on Financial Services in the DIFC in contravention of the general prohibition;
      (b) engaged in Market Misconduct; or
      (c) engaged in financial crime or Money laundering;
      it must immediately give the DFSA notice of that event, along with full details of that information in writing.

      Directions by an exchange

      AMI 10.9.5

      Where an Authorised Market Institution Licensed to be Operating an Exchange:

      (a) decides to limit the open position of any Person in Investments; or
      (b) issues directions to any Person to close out his position in any Investment;
      that Authorised Market Institution must immediately give the DFSA notice of that event, and the Person's name, the Investment and size of any position to be limited or closed-out and the reasons for the Authorised Market Institution's decision.

      AMI 10.10 Supervisory directions

      AMI 10.10 Guidance

      1. Article 9 of the Markets Law 2004 provides as follows:
      "(1) Without limiting the application of the Regulatory Law 2004, the DFSA may by written notice direct an Authorised Market Institution to do or not do specified things that the DFSA considers are necessary or desirable to comply with the Law or ensure the integrity of the Financial Services industry in the DIFC, including but not limited to directions:
      (a) requiring compliance with any duty, requirement, prohibition, obligation or responsibility applicable to an Authorised Market Institution; or
      (b) requiring an Authorised Market Institution to act in a specified manner in relation to transactions conducted on or through the facilities operated by an Authorised Market Institution, or in relation to a specified Class of transactions.
      (2) Without limiting the application of Article 75 of the Regulatory Law 2004, the DFSA may, with the approval of the Council, by written notice direct an Authorised Market Institution to:
      (a) close the market or facilities operated by an Authorised Market Institution in a particular manner or for a specified period;
      (b) suspend transactions on the market or through the facilities operated by an Authorised Market Institution;
      (c) suspend transactions in Investments conducted on the market or through the facilities operated by an Authorised Market Institution;
      (d) prohibit trading in Investments conducted on the market or through the facilities operated by an Authorised Market Institution;
      (e) defer for a specified period the completion date of transactions conducted on the market or through the facilities operated by an Authorised Market Institution; or
      (f) do any act or thing, or not do any act or thing, in order to ensure an orderly market, or reduce risk to the DFSA's objectives.
      (3) The Regulatory Appeals Committee has jurisdiction to hear and determine any appeal in relation to a decision to issue a direction under this Article."
      2. The DFSA expects to use these powers only in exceptional circumstances. Factors the DFSA will consider in exercising these powers include:
      a. what steps the Authorised Market Institution has taken or is taking in respect of the issue being addressed in the planned direction;
      b. the impact on the DFSA's objectives if a direction were not issued; or
      c. whether it is in the interests of the DIFC.
      3. The written notice given by the DFSA will specify what an Authorised Market Institution is required to do under the exercise of such powers. Though the DFSA is not required to do so under the Markets Law, in most cases, the DFSA will contact the Authorised Market Institution prior to issuing such a direction.

      AMI 11 Anti Money Laundering Rules for Authorised Market Institutions

      AMI 11.1 u.a.e. federal law

      AMI 11.1 Guidance

      1. In connection with Article 72 of the Regulatory Law 2004, this chapter relates to regulatory requirements imposed by the DFSA, as opposed to requirements imposed by applicable criminal laws, that is relevant provisions of the 'Federal Law No 4. of 2002 - Criminalisation of Money Laundering of the U.A.E.' (U.A.E. Law No. 4), the 'Federal Law No. 1 of 2004' regarding anti terrorism, the u.a.e. Penal Code and any other federal law of the U.A.E as applicable in the DIFC in relation to anti Money Laundering compliance. The Rules of the chapter should therefore not be relied upon to interpret or determine the application of the Money Laundering laws of the U.A.E.
      2. By virtue of Article 3(1) of 'Federal Law No. 8 of 2004', the u.a.e. Law No. 4 of 2002 applies to all operations in the DIFC. In Recognition of this, Article 70(3) of the Regulatory Law requires an Authorised Market Institution to comply with the u.a.e. Law No. 4. Pursuant to Article 70(3), an Authorised Market Institution is required to comply with the u.a.e. Law No. 4. The defined term of 'Money Laundering' in these Rules follows that in the u.a.e. Law No.4. The legal definition of the offence of 'Money Laundering' is set out in Article 1 of the u.a.e. Law No.4.

      AMI 11.2 Application

      AMI 11.2.1

      This chapter applies to every Authorised Market Institution and the Money Laundering Reporting Officer (MLRO) of an Authorised Market Institution.

      AMI 11.2.1 Guidance

      The requirement for the appointment of an MLRO of an Authorised Market Institution is set out in rule 7.4.1(2)(c).

      AMI 11.3 Purpose

      AMI 11.3 Guidance

      1. These Rules require an Authorised Market Institution to have adequate policies, procedures, systems and controls in place to prevent the activity of Money Laundering. Money Laundering is generally described as the process by which criminals attempt to hide or disguise the true origin and ownership of the proceeds of their criminal activities, thereby avoiding prosecution, conviction and confiscation of criminal funds. This includes the closely Related subject of 'terrorist financing'.
      2. Accordingly, where the DFSA uses 'money laundering' either as a defined or undefined term, Authorised Market Institutions are required to include 'terrorist financing' in all considerations with regard to their policies, procedures, systems and controls.

      AMI 11.4 General Requirements

      AMI 11.4.1

      (1) An Authorised Market Institution must establish and maintain effective anti Money Laundering policies, procedures, systems and controls to prevent opportunities for Money Laundering, in relation to the Authorised Market Institution, and its activities in relation to its Members.
      (2) An Authorised Market Institution must take reasonable steps to ensure that its Employees comply with the relevant requirements of its anti Money Laundering policies, procedures, systems and controls.

      AMI 11.4.1 Guidance

      1. An Authorised Market Institution's anti Money Laundering policies, procedures, systems and controls should:
      a. ensure compliance with the U.A.E Law No.4 and any other relevant Federal laws;
      b. enable suspicious Members and transactions to be detected and reported;
      c. ensure the Authorised Market Institution is able to provide an audit trail of a transaction; and
      d. comply with any other obligation in these Rules.
      2. An Authorised Market Institution's anti Money Laundering compliance arrangements should consist of policies, procedures, systems and controls and may also encompass appropriate anti Money Laundering programmes and strategies.
      3. An Authorised Market Institution should have a policy statement detailing the duties and obligations of its MLRO.
      4. In accordance with GEN rule 5.3.19 an Authorised Market Institution should have specific arrangements to consider the fitness and propriety of its staff. The arrangements should take into account criminal convictions, adverse findings by courts or regulatory authorities in the u.a.e. or elsewhere, or engagement in dishonest or improper business practices.
      5. Under Article 3 of the u.a.e. Law No.4, an Authorised Market Institution may be criminally liable for the offence of Money Laundering if such an activity is intentionally committed in its names or for its accounts.

      AMI 11.4.2

      (1) An Authorised Market Institution must include in its Business Rules an anti Money Laundering regime applicable to its Members.
      (2) The anti Money Laundering regime referred to in (1) must include at least rules in relation to:
      (a) application of the u.a.e. Law No. 4 and the u.a.e. Penal Code;
      (b) anti Money Laundering compliance arrangements;
      (c) appointment of an MLRO;
      (d) customer identification and retention of documents;
      (e) internal and external reporting of suspicious transactions, taking into account the applicable anti Money Laundering legislation;
      (f) Transaction monitoring;
      (g) use of government, regulatory an international findings with regard to anti Money Laundering deficiencies in specific jurisdictions and with regard to Money Laundering and terror suspects;
      (h) risk assessment; and
      (i) training.
      (3) An Authorised Market Institution must monitor and regularly review compliance of its Members with its anti Money Laundering regime.
      (4) An Authorised Market Institution must ensure that its Members rectify any contraventions of its anti Money Laundering regime without delay.
      (5) An Authorised Market Institution must notify the DFSA of any:
      (a) material breach of its anti Money Laundering regime by a Member;
      (b) circumstances in which a Member will not or cannot rectify a breach of its anti Money Laundering regime; and
      (c) conduct which the Authorised Market Institution knows or ought reasonably know amounts to terrorist financing.

      AMI 11.4.2 Guidance

      1. In accordance with the Regulatory Law, the DFSA is responsible for monitoring anti Money Laundering compliance of Authorised Market Institutions. An Authorised Market Institution is responsible for anti Money Laundering compliance of all its Members with its anti Money Laundering regime. Authorised Firms must also comply with the DFSA's AML module.
      2. An Authorised Market Institution must operate appropriate measures to reduce Market Misconduct on the Authorised Market Institution's facilities. As part of this requirement, an Authorised Market Institution shall include an anti Money Laundering regime in their Business Rules.
      3. An Authorised Market Institution may review the operation of its Members' anti Money Laundering policies, procedures, systems and controls in its regular reviews of Members' operations.
      4. Before an Authorised Market Institution accepts a prospective Member, it should ensure that the applicant has an anti Money Laundering programme in place which is designed to comply with all applicable anti Money Laundering legislation.

      AMI 11.5 Co-operation with regulators

      AMI 11.5.1

      An Authorised Market Institution that receives a request for information from a Financial Services Regulator or agency responsible for anti Money Laundering regarding enquiries into potential Money Laundering Related to activities carried on in or from the DIFC, must promptly inform the DFSA in writing.

      AMI 11.6 Appointment, responsibilities and duties of the MLRO

      Appointment

      AMI 11.6 Guidance

      1. The requirement to appoint an individual as MLRO is contained in rule 7.4.1(2)(c).
      2. Pursuant to rule 7.4.1(2)(c), the MLRO must be ordinarily resident in the U.A.E.

      AMI 11.6.1

      An Authorised Market Institution must ensure that the MLRO is of sufficient seniority within the Authorised Market Institution to enable him to:

      (a) act on his own authority;
      (b) have direct access to the Governing Body and senior management;
      (c) have sufficient resources including, if necessary, an appropriate number of appropriately trained Employees to assist in the performance of his duties in an effective, objective and independent manner;
      (d) have unrestricted access to information the Authorised Market Institution has about the financial and business circumstances of a Member; and
      (e) have unrestricted access to relevant information about the features of the transactions relevant to the Authorised Market Institution.

      AMI 11.6.1 Guidance

      GEN rule 5.3.18 requires an Authorised Market Institution to establish and maintain systems an controls that enable it to satisfy itself of the suitability of anyone who acts for it.

      Responsibilities

      AMI 11.6.2

      (1) An Authorised Market Institution must ensure that its MLRO is responsible for all of its anti Money Laundering activities carried on in or from the DIFC.
      (2) An Authorised Market Institution must ensure that its MLRO carries out and is responsible for the following:
      (a) establishing and maintaining the Authorised Market Institution's anti Money Laundering policies, procedures, systems and controls and compliance with anti Money Laundering legislation applicable in the DIFC;
      (b) the day-to-day operations for compliance with the Authorised Market Institution's anti Money Laundering policies, procedures, systems and controls;
      (c) the compliance monitoring and review of the Member's anti Money Laundering policies, procedures, systems and controls with the Authorised Market Institution's anti Money Laundering regime pursuant to rule 11.4.2;
      (d) taking appropriate action pursuant to Rule11.4.2(3) in order to ensure that contraventions of its Members are rectified without delay;
      (e) acting as the point of contact to receive internal Suspicious Transaction Reports from the Authorised Market Institution's Employees pursuant to rule 11.8.1;
      (f) taking appropriate action pursuant to rule 11.8.2 following the receipt of an internal suspicious transaction report from the Authorised Market Institution's Employees;
      (g) making, in accordance with u.a.e. Law No.4, external Suspicious Transaction Reports to the Anti Money Laundering Suspicious Cases Unit (AMLSCU) of the u.a.e. and sending corresponding copies to the DFSA under rule 11.8.2;
      (h) acting as the point of contact within the Authorised Market Institution for competent u.a.e. authorities, the DFSA and its Members regarding Money Laundering issues;
      (i) responding promptly to any request for information made by competent u.a.e. authorities or the DFSA; and
      (j) establishing and maintaining an appropriate anti Money Laundering training programme and adequate awareness arrangements pursuant to Rules under section 11.12.

      AMI 11.6.2 Guidance

      In accordance with GEN rule 5.3.21 where an Authorised Market Institution outsources specific anti Money Laundering tasks of its MLRO to another suitable individual of a third party provider, including within a corporate Group, the MLRO of the Authorised Market Institution remains responsible for ensuring compliance with the duties imposed on the MLRO.

      Reporting

      AMI 11.6.3

      The MLRO must report at least annually to the Governing Body or senior management of the Authorised Market Institution on the following matters:

      (a) the Authorised Market Institution's compliance with applicable anti Money Laundering laws including Rules;
      (b) the quality of the Authorised Market Institution's anti Money Laundering policies, procedures, systems and controls;
      (c) the general compliance of its Members with the anti Money Laundering regime contained in the Business Rules;
      (d) any internal Suspicious Transaction Reports made by the Authorised Market Institution's staff pursuant to rule 11.8.1 and action taken in respect of those reports, including the grounds for all decisions;
      (e) any external Suspicious Transaction Reports made by the Authorised Market Institution pursuant to rule 11.8.2 and action taken in respect of those reports including the grounds for all decisions;
      (f) any external Suspicious Transaction Reports made by the Authorised Market Institution's Members to the AMLSCU; and
      (g) any other relevant matters Related to Money Laundering as it concerns the Authorised Market Institution's business.

      AMI 11.6.4

      An Authorised Market Institution must ensure that its Governing Body or senior management promptly:

      (a) assess the report provided under rule 11.6.3;
      (b) take action, as required subsequent to the findings of the report, in order to resolve any identified deficiencies; and
      (c) make a record of their assessment in (a) and the action taken in (b).

      AMI 11.6.5

      (1) The report provided under rule 11.6.4 and the records of the assessment and actions pursuant to rule 11.6.4 must be documented in writing.
      (2) A complete copy of the Report and records of the assessment and actions must be provided to the DFSA promptly.

      AMI 11.7 Member identification requirements

      Duties and responsibilities

      AMI 11.7.1

      (1) Subject to the exception under rule 11.7.4, an Authorised Market Institution must establish and verify the identity of any Member with or for whom the Authorised Market Institution acts or proposes to act.
      (2) In establishing and verifying a Member's true identity, an Authorised Market Institution must obtain sufficient and satisfactory evidence having considered:
      (a) its risk assessment under rule 11.10.1 in respect of the Member; and
      (b) the relevant provisions of App2 and App3.
      (3) An Authorised Market Institution must update as appropriate any Member identification policies, procedures, systems and controls.

      AMI 11.7.1 Guidance

      1. An Authorised Market Institution should adopt a risk-based approach for the Member identification and verification process. Depending on the outcome of the Authorised Market Institution's Money Laundering risk assessment of its Member, it should decide to what level of detail the Member identification and verification process will need to be performed.
      2. The requirements for Members on how to identify and verify their Clients should be set out in the Authorised Market Institution's anti Money Laundering regime.

      AMI 11.7.2

      The obligations under Rules 11.7.1 must be fulfilled before the Authorised Market Institution effects any Transaction on behalf of the Member.

      AMI 11.7.3

      (1) An Authorised Market Institution must ensure that the information and documentation concerning a Member's identity remains accurate and up-to-date.
      (2) If at any time an Authorised Market Institution becomes aware that it lacks sufficient information or documentation concerning a Member's identification, or develops a concern about the accuracy of its current information or documentation, it must promptly obtain appropriate material to verify the Member's identity.

      AMI 11.7.3 Guidance

      1. An Authorised Market Institution should undertake a periodic review to ensure that Member identity documentation is accurate and up-to-date.
      2. An Authorised Market Institution should undertake a review particularly when there is a material change in the nature or ownership of the Member.
      3. Additional elements concerning the Member identification which an Authorised Market Institution should take into account are set out as further Guidance in App2.

      Exception to Member identification requirements

      AMI 11.7.4

      (1) Subject to rule 11.7.5, an Authorised Market Institution is not required to establish the identity of a Member pursuant to rule 11.7.1 if the Member is one of the following:
      (a) an Authorised Firm; or
      (b) a Recognised Member whose identity has been verified in a manner consistent with these Rules or equivalent international standards applying in FATF Countries, provided that:
      (i) no exception from identification obligations has been applied in the original identification process; and
      (ii) a written statement is received from the introducing Exchange or Clearing House confirming that the Recognised Member has been identified with the relevant standards under (b)(i); any identification evidence can be accessed by the Authorised Market Institution without delay; and the identification evidence is kept for at least six years or any other period acceptable to the DFSA.
      (2) If an Authorised Market Institution is not satisfied that the Recognised Member has been identified in a manner consistent with these Rules, the Authorised Market Institution must perform the verification process itself.

      AMI 11.7.4 Guidance

      The DFSA would expect an Authorised Market Institution to take reasonable steps to determine whether or not a Member falls within the exceptions under this rule, and to keep records of the basis on which a Member's identity was not required to be verified.

      AMI 11.7.5

      (1) rule 11.7.4 does not apply where the Authorised Market Institution:
      (a) knows or suspects; or
      (b) has reasonable grounds to know or suspect;
      that a Member is engaged in Money Laundering.
      (2) The Authorised Market Institution will be taken to know or suspect or to have reasonable grounds to know or suspect, if:
      (a) any Employee handling the Transaction or potential transaction; or
      (b) anyone managerially responsible for it;
      knows or suspects or has reasonable grounds to know or suspect that a Member is engaged in Money Laundering.

      Documentation and records

      AMI 11.7.6

      (1) All relevant information, correspondence and documentation used by an Authorised Market Institution to verify a Member's identity pursuant to Rules 11.7.1 must be kept for at least six years from the date on which the business relationship with a Member has ended.
      (2) If the date on which the business relationship with a Member has ended remains unclear, it may be taken to have ended on the date of the completion of the last Transaction.

      AMI 11.7.6 Guidance

      The records maintained by an Authorised Market Institution should be kept in such a manner that:

      a. the DFSA or another competent third party is able to assess the Authorised Market Institution's compliance with legislation applicable in the DIFC;
      b. any Transaction which was processed by or through the Authorised Market Institution on behalf of a Member can be reconstructed;
      c. any Member can be identified;
      d. all internal and external Suspicious Transaction Reports can be identified; and
      e. the Authorised Market Institution can satisfy, within an appropriate time, any regulatory enquiry or Court order to disclose information.

      AMI 11.7.7

      All relevant details of any Transaction carried out by the Authorised Market Institution with or for a Member must be kept for at least six years from the date on which the Transaction was completed.

      AMI 11.7.8

      (1) Where Member identification records are kept by the Authorised Market Institution or other Persons outside the u.a.e., an Authorised Market Institution must take reasonable steps to ensure that the records are held in a manner consistent with these Rules.
      (2) An Authorised Market Institution must verify if there are secrecy or data protection legislation that would restrict access without delay to such data by the Authorised Market Institution, the DFSA or the law enforcement agencies of the u.a.e. Where such legislation exists, the Authorised Market Institution must obtain without delay certified copies of the relevant identification evidence and keep these copies in a jurisdiction which allows access by all those Persons.

      AMI 11.7.9

      An Authorised Market Institution must not:

      (a) establish a correspondent banking relationship with a Shell Bank;
      (b) establish or keep anonymous accounts or accounts in false names; or
      (c) maintain a nominee account which is held in the name of one Person, but controlled by or held for the benefit of another Person whose identity has not been disclosed to the Authorised Market Institution.

      AMI 11.7.9 Guidance

      An Authorised Market Institution should also have arrangements to guard against establishing a business relationship with business partners who permit their accounts to be used by Shell Banks.

      AMI 11.8 Internal and external reporting requirements

      AMI 11.8.1

      (1) An Authorised Market Institution must have appropriate arrangements to ensure that whenever any Employee, acting in the ordinary course of his employment, either:
      (a) knows or suspects; or
      (b) has reasonable grounds for knowing or suspecting; that a Person is engaged in Money Laundering,
      that Employee makes an internal suspicious transaction report to the Authorised Market Institution's MLRO.
      (2) An Authorised Market Institution must have policies and procedures to ensure that disciplinary action can be taken against any Employee who fails to make such a report.

      AMI 11.8.1 Guidance

      The requirement for Employees to make an internal suspicious transaction report should include situations when no business relationship was developed because the circumstances were suspicious.

      AMI 11.8.2

      If an Authorised Market Institution's MLRO receives an internal suspicious transaction report he must without delay:

      (a) investigate the circumstances in relation to which the report was made;
      (b) determine whether in accordance with U.A.E Law No.4 of 2002 a corresponding external suspicious transaction report must be made to the AMLSCU;
      (c) if required, make such an external report to the AMLSCU; and
      (d) provide a copy of such an external report to the DFSA at the time of provision under U.A.E Law No.4 of 2002.

      AMI 11.8.2 Guidance

      1. An Authorised Market Institution may allow its Employees to consult with their line managers before sending a report to the MLRO. The DFSA would expect that such consultation does not prevent making a report whenever an Employee has stated that he has knowledge, suspicion or reasonable grounds for knowing or suspecting that a Transaction may involve Money Laundering.
      2. Authorised Market Institutions are reminded that the failure to report suspicions of Money Laundering may constitute a criminal offence that is punishable under the laws of the U.A.E.
      3. External Suspicious Transaction Reports under u.a.e. Law No.4 should be faxed to the AMLSCU and a copy faxed to the DFSA. The dedicated fax numbers and the template for making Suspicious Transaction Reports are available on the DFSA website.

      AMI 11.8.3

      The MLRO must document:

      (a) the steps taken to investigate the circumstances in relation to which an internal suspicious transaction report is made; and
      (b) where no external suspicious transaction report is made to the AMLSCU the reasons why no such report was made.

      AMI 11.8.4

      All relevant details of any internal and external suspicious transaction report pursuant to Rules 11.8.1 and 11.8.2 must be kept for at least six years from the date on which the report was made.

      AMI 11.8.5

      An Authorised Market Institution must ensure that if the MLRO decides to make an external suspicious transaction report in accordance with rule 11.8.2, his decision is made independently and is not subject to the consent or approval of any other Person.

      AMI 11.8.6

      Authorised Market Institutions must not carry out transactions which they know or suspect or have reasonable grounds for knowing or suspecting to be Related to Money Laundering until they have informed the AMLSCU and the DFSA pursuant to rule 11.8.2.

      AMI 11.8.6 Guidance

      1. If the Authorised Market Institution has reported a suspicion to the AMLSCU, the AMLSCU may instruct an Authorised Market Institution on how to proceed with the Transaction. If a Person expresses his wish to move the funds before an Authorised Market Institution receives instruction from the AMLSCU on how to proceed, the Authorised Market Institution should immediately contact the AMLSCU for further instructions.
      2. Pursuant to Article 4 of the u.a.e. Law No.4:
      a. the Central Bank of the u.a.e. may order the freezing of suspected Property for a maximum of seven days;
      b. the public prosecutor office of the u.a.e. may order seizure of suspected Property, proceeds or instrumentalities; or
      c. a competent Court of the u.a.e. may order provisional attachment for undetermined periods on any Property, proceeds or instrumentalities, if they have resulted from, or are associated with, a Money Laundering offence.
      3. Further, and pursuant to Article 4 of the u.a.e. Law No. 4, the Attorney General of the u.a.e. has the exclusive authority to initiate criminal action against a perpetrator of offences set out in the law.

      Tipping-off

      4. Authorised Market Institutions are reminded that in accordance with Article 16 of the u.a.e. Law No.4 of 2002, Authorised Market Institutions or any of their Employees must not tip-off any Person, that is, inform any Person that his Transaction is being scrutinised for possible involvement in suspicious Money Laundering operations, or that any other competent authority is investigating his possible involvement in suspicious Money Laundering operations.

      AMI 11.9 Government, regulatory and international findings

      AMI 11.9 Guidance

      1. Taking into account its risk assessment pursuant to section 11.10, the DFSA expects that an Authorised Market Institution will make reference to and make appropriate use of any findings issued by:
      a. the government of the u.a.e. or any government departments in the U.A.E.;
      b. the Central Bank of the u.a.e. or the AMLSCU;
      c. the Financial Action Task Force (FATF); and
      d. the DFSA;
      which contain:
      e. a finding or other conclusion concerning arrangements for restraining Money Laundering in a particular country or jurisdiction; and
      f. an assessment that those arrangements assessed to be materially deficient in comparison with one or more of the relevant, internationally accepted standards, including any recommendations published by the FATF, required of or recommended to countries and jurisdictions.
      2. When an Authorised Market Institution makes a decision about its anti Money Laundering policies, procedures, systems and controls, it may take into account any findings of inadequacy, for example from the FATF list of Non Cooperative Countries and Territories, concerning the approach to Money Laundering of individual countries or jurisdictions.
      3. Authorised Market Institutions should examine and pay special attention to any transactions or business relations with Persons located in such countries or jurisdictions.
      4. Authorised Market Institutions considering transactions or business relationships with Persons located in countries or jurisdictions that have been identified as deficient, or against which the u.a.e. or the DFSA have outstanding advisories, should be aware of the background against which the assessments, or the specific recommendations have been made.
      5. The Authorised Market Institution's MLRO is not obliged to report all transactions from these countries or jurisdictions to the AMLSCU and the DFSA if they do not qualify as suspicious pursuant to u.a.e. Law No.4.
      6. Transactions with counter parties located in countries or jurisdictions which have been relieved from special scrutiny, for example taken off the FATF list of NCCTs, may nevertheless require attention which is higher than normal.
      7. In order to assist Authorised Market Institutions, the DFSA will, from time to time, publish u.a.e. national, FATF or other findings. However, the DFSA expects that an Authorised Market Institution will take its own steps in acquiring relevant information from various available sources.
      8. Taking into account its risk assessment pursuant to section 11.10, an Authorised Market Institution may make reference to and make appropriate use of any findings issued by:
      a. the government of the u.a.e. or any government departments in the U.A.E.;
      b. the Central Bank of the u.a.e. or the AMLSCU;
      c. u.a.e. enforcement agencies; and
      d. the DFSA;
      which contain a finding or other conclusion concerning names of Persons, Groups, organisations or entities or any other body where suspicion of Money Laundering or terrorist financing exists.
      9. An Authorised Market Institution may obtain and appropriately use available national and international information, for example suspect lists or databases from credible public or private sources with regard to Money Laundering and terrorist financing. The DFSA encourages Authorised Market Institutions to perform checks against their Member databases and records for any names appearing on such lists and databases.

      AMI 11.10 Money Laundering risks

      Risk assessment

      AMI 11.10.1

      (1) The anti Money Laundering policies, procedures, systems and controls of an Authorised Market Institution must adequately address the Money Laundering risks which take into account any vulnerabilities of its products, services and Members.
      (2) In assessing the risks in relation to Money Laundering, an Authorised Market Institution must have regard to the relevant provisions of App2 and App3.
      (3) An Authorised Market Institution must assess its risks in relation to Money Laundering and perform enhanced due diligence investigations for higher risk products, services and Members.
      (4) An Authorised Market Institution must be aware of any Money Laundering risks that may arise from new or developing technologies that might favour anonymity and take measures to prevent their use for the purpose of Money Laundering.

      Risks regarding corruption and politically exposed persons

      AMI 11.10.2

      (1) An Authorised Market Institution must have systems and controls to determine whether a Member is a Politically Exposed Person.
      (2) When an Authorised Market Institution has a Member relationship with a Politically Exposed Person, it must have specific arrangements to address the risks associated with corruption and Politically Exposed Persons.

      AMI 11.10.2 Guidance

      Guidance on how an Authorised Market Institution may address this risk is set out in App3 section A3.2.

      Suspicious transactions and Transaction monitoring

      AMI 11.10.3

      An Authorised Market Institution must establish and maintain policies, procedures, systems and controls in order to monitor for and detect suspicious transactions.

      AMI 11.10.3 Guidance

      1. An Authorised Market Institution should apply an intensified and ongoing monitoring programme over higher risk transactions and accounts.
      2. Various risk aspects about Transaction monitoring and about the detection of suspicious transactions, which the Authorised Market Institution should take into account, are set out as further Guidance in App3 section A3.3.
      3. An Exchange may have Transaction monitoring arrangements which are less sophisticated than those for Clearing Houses.

      AMI 11.11 Transfer of funds

      AMI 11.11.1

      (1) Where an Authorised Market Institution makes a payment on behalf of a Person to a Financial Institution using an electronic payment and message system, it must include the Person's name, address and either an account number or an unique reference number in the payment instruction.
      (2) The requirement in (1) does not apply to an Authorised Market Institution which transfers funds to a Financial Institution where both the Originator and the beneficiary are Financial Institutions acting on their own behalf.

      AMI 11.11.1 Guidance

      1. 'FATF Special Recommendation Number 7' seeks to ensure that national or international electronic payment and message systems, including fund or wire transfer systems such as SWIFT, are not misused as a means to break the Money Laundering audit trail. Therefore, the information about a Person as the Originator of the fund transfer should remain with the payment instruction through the payment chain.
      2. An Authorised Market Institution should monitor for and conduct enhanced scrutiny of suspicious activities including incoming fund transfers that do not contain complete Originator information, including name, address and account number or unique reference number in accordance with App3.

      AMI 11.12 Awareness and training

      AMI 11.12.1

      An Authorised Market Institution must have arrangements to provide periodic information and relevant training to all Employees to ensure that they are aware of:

      (a) the identity and responsibilities of the Authorised Market Institution's MLRO;
      (b) the Authorised Market Institution's anti Money Laundering regime in relation to its Members pursuant to rule 11.4.2;
      (c) applicable legislation relating to anti Money laundering;
      (d) the potential effect on the Authorised Market Institution, its Employees and its Members of breaches of applicable legislation relating to Money laundering;
      (e) the Authorised Market Institution's anti Money Laundering policies, procedures, systems and controls and any changes to these;
      (f) Money Laundering risks, trends and techniques;
      (g) the types of activity that may constitute suspicious activity in the context of the business in which an Employee is engaged that may warrant an internal suspicious transaction report pursuant to rule 11.8.1;
      (h) the Authorised Market Institution's arrangements regarding the making of an internal suspicious transaction report pursuant to rule 11.8.1; and
      (i) Member identification requirements pursuant to the Rules in section 11.7.

      AMI 11.12.2

      Information described under rule 11.12.1 must be brought to the attention of new Employees and must remain available to all Employees.

      AMI 11.12.3

      (1) An Authorised Market Institution must have arrangements to ensure that:
      (a) its anti Money Laundering training is up-to-date with Money Laundering trends and techniques;
      (b) its anti Money Laundering training is appropriately tailored to the Authorised Market Institution's different activities, services, Members and indicates any different levels of Money Laundering risk and vulnerabilities; and
      (c) all Employees receive anti Money Laundering training.
      (2) An Authorised Market Institution must conduct anti Money Laundering training sessions with sufficient frequency to ensure that within 12 months it is provided to all Employees.

      AMI 11.12.4

      (1) All relevant details of the Authorised Market Institution's anti Money Laundering training must be recorded, including:
      (a) dates when the training was given;
      (b) the nature of the training, and
      (c) the names of the Employees who received the training.
      (2) These records must be kept for at least six years from the date on which the training was given.

      AMI 12 Enforcement Powers and Authorised Market Institutions

      AMI 12.1 Application of ENF module

      AMI 12.1 Guidance

      The DFSA has powers of enforcement and intervention which apply to Authorised Market Institutions. These powers are dealt with in ENF.

      AMI 13. Islamic Financial Business

      AMI 13.1 Application

      AMI 13.1.1

      The requirements in this chapter apply to an Authorised Market Institution whose Licence has been endorsed authorising the Authorised Market Institution to conduct Islamic Financial Business as an Islamic Financial Institution or an Islamic Window in accordance with Article 12 of the Law Regulating Islamic Financial Business 2004.

      AMI 13.2 Disclosure requirements in relation to Islamic financial business

      AMI 13.2.1

      An Authorised Market Institution must disclose the following information to each Person granted access to its facilities at the outset of the relationship, following the endorsement process required by Article 12 of the Law Regulating Islamic Financial Business 2004, and thereafter whenever the information changes:

      (a) the Members of the Authorised Market Institution's Shari'a Supervisory Board (SSB); and
      (b) if the Person granted access to its facilities requests, the manner and frequency of Shari'a reviews.

      AMI 13.2.1 Guidance

      Article 12 of the Law Regulating Islamic Financial Business 2004 sets out the basis upon which an Authorised Firm and an Authorised Market Institution must seek an endorsement on its Licence to conduct Islamic Financial Business as an Islamic Financial Institution or an Islamic Window.

      AMI 13.3 Constitutional documents

      Islamic financial institutions

      AMI 13.3.1

      An Authorised Market Institution endorsed as an Islamic Financial Institution must ensure that its constitutional documents State that its business operations will be conducted in accordance with Shari'a.

      AMI 13.4 Systems and controls

      General requirement

      AMI 13.4.1

      An Authorised Market Institution must establish and maintain systems and controls which ensure that it complies with Shari'a.

      AMI 13.4.1 Guidance

      Responsibility for ensuring that an Authorised Market Institution complies with Shari'a ultimately rests with its senior management.

      AMI 13.5 Policy and document requirements

      Policy and procedures manual

      AMI 13.5.1

      (1) An Authorised Market Institution must implement and maintain an Islamic Financial Business policy and procedures manual which addresses the following matters:
      (a) the manner in which the compliance with Shari'a will be ensured;
      (b) the manner in which the SSB will oversee and advise in regard to the Islamic Financial Business conducted by the Authorised Market Institution;
      (c) the manner in which SSB fatwas, rulings and guidelines will be recorded, disseminated and implemented and the internal Shari'a review undertaken;
      (d) the manner in which disputes between the SSB and the Authorised Market Institution in respect of Shari'a compliance will be addressed;
      (e) the process for approving those internal systems and controls which are in place to ensure not only that the Islamic Financial Business is carried out in compliance with Shari'a, but that information is disseminated to a Person granted access to its facilities in an appropriate manner; and
      (f) the manner in which conflicts of interest will be identified and managed.

      AMI 13.6 Shari'a Supervisory Board

      Appointment and operation of a Shari'a Supervisory Board

      AMI 13.6 Guidance

      Pursuant to Article 13 of the Law Regulating Islamic Financial Business 2004, an Authorised Market Institution Undertaking Islamic Financial Business must appoint a Shari'a Supervisory Board.

      AMI 13.6.1

      When an Authorised Market Institution appoints a Shari'a Supervisory Board, it must ensure that:

      (a) the Shari'a Supervisory Board has at least three members;
      (b) the Members appointed to the Shari'a Supervisory Board are competent to perform their functions as Shari'a Supervisory Board members;
      (c) any appointments, dismissals or changes in respect of Members of the Shari'a Supervisory Board are approved by the Governing Body of the Authorised Market Institution; and
      (d) no Member of the Shari'a Supervisory Board is a Director of the Authorised Market Institution.

      AMI 13.6.1 Guidance

      For the purposes of rule 6.1.1, an Authorised Market Institution should consider the previous experience and qualifications of the proposed Shari'a Supervisory Board Members to assess whether the proposed Shari'a Supervisory Board Member is competent to advise on the Islamic Financial Business to be undertaken by the Authorised Market Institution.

      AMI 13.6.2

      An Authorised Market Institution must document its policy in relation to:

      (a) how appointments, dismissals or changes will be made to the Shari'a Supervisory Board;
      (b) the process through which the suitability of Shari'a Supervisory Board Members will be considered; and
      (c) the Remuneration of the Members of the Shari'a Supervisory Board;

      AMI 13.6.3

      An Authorised Market Institution must establish and maintain records of:

      (a) its assessment of the competency of the Shari'a Supervisory Board members;
      (b) the agreed terms of engagement of each Member of the Shari'a Supervisory Board; and
      (c) the matters in Rules 13.6.1(c) and 13.6.2,
      for six years.

      AMI 13.6.3 Guidance

      The records of the assessment of competency of Shari'a Supervisory Board Members should clearly indicate; at least:

      a. the factors that have been taken into account when making the assessment of competency;
      b. the qualifications and experience of the Shari'a Supervisory Board members;
      c. the basis upon which the Authorised Market Institution has deemed that the proposed Shari'a Supervisory Board Member is suitable; and
      d. details of any other Shari'a Supervisory Boards of which the proposed Shari'a Supervisory Board Member is, or has been, a Member.

      AMI 13.6.4

      An Authorised Market Institution must take reasonable steps to ensure that the Shari'a Supervisory Board is independent of and not subject to any conflict of interest with respect to the Authorised Market Institution.

      AMI 13.6.5

      If requested by the DFSA, an Authorised Market Institution must provide the DFSA with information on its appointed or proposed Shari'a Supervisory Board Members with regard to the qualifications, skills, experience and independence of the Shari'a Supervisory Board Members.

      AMI 13.6.6

      An Authorised Market Institution must take reasonable steps to ensure that it and its Employees:

      (a) provide such assistance as the Shari'a Supervisory Board reasonably requires to discharge its duties;
      (b) give the Shari'a Supervisory Board right of access at all reasonable times to relevant records and information;
      (c) do not interfere with the Shari'a Supervisory Board's ability to discharge its duties; and
      (d) do not provide false or misleading information to the Shari'a Supervisory Board.

      AMI 13.7 Shari'a reviews

      AMI 13.7.1

      An Authorised Market Institution must ensure that all Shari'a reviews are undertaken by the Shari'a Supervisory Board in accordance with AAOIFI GSIFI No 2.

      AMI 13.7.2

      (1) An Authorised Market Institution must Commission an annual report from the Shari'a Supervisory Board which complies with AAOIFI GSIFI No 1.
      (2) An Authorised Market Institution must deliver a copy of the annual report of the Shari'a Supervisory Board to the DFSA within 14 days of having received it.

      AMI 13.8 Internal Shari'a review

      AMI 13.8.1

      An Authorised Market Institution must perform an internal Shari'a review to assess the extent to which the Authorised Market Institution complies with fatwas, rulings and guidelines issued by the Authorised Market Institution's Shari'a Supervisory Board.

      AMI 13.8.2

      An Islamic Financial Institution must perform the internal Shari'a review in accordance with AAOIFI GSIFI No 3.

      AMI 13.8.3

      An Authorised Market Institution which operates an Islamic Window must, to the extent possible, perform the internal Shari'a review in accordance with AAOIFI GSIFI No 3 and must document the manner in which it will conduct that part of the internal Shari'a review that is not conducted in accordance with AAOIFI GSIFI No 3.

      AMI 13.8.3 Guidance

      GSIFI No. (3) (Internal Shari'a Review) establishes standards and provides Guidance on the internal Shari'a review in institutions that conduct business in conformity with Shari'a. The standard covers the following:

      a. Objectives;
      b. Internal Shari'a Review;
      c. Independence and objectivity;
      d. Professional proficiency;
      e. Scope of work;
      f. Performance of the Internal Shari'a Review work;
      g. Management of the Internal Shari'a Review;
      h. Quality assurance; and
      i. Elements of an effective Internal Shari'a Review control system.

      AMI 13.8.4

      An Authorised Market Institution must ensure that the internal Shari'a review is performed by the internal audit function or the compliance function of the Authorised Market Institution and that the individuals or departments involved in performing the review are competent and sufficiently independent to assess compliance with Shari'a.

      AMI 13.8.4 Guidance

      For the purposes of assessing competency of personnel or departments which perform the internal Shari'a review, Authorised Market Institutions should consult AAOIFI GSIFI No 3 paragraphs 9-16 inclusive.

      AMI App1 Guidance on Fitness and Propriety

      AMI A1.1 Introduction

      AMI A1.1 Guidance

      1. This appendix provides Guidance on the matters which the DFSA may take into account when assessing, for the purpose of AMI, the fitness and propriety of:
      a. an applicant for a Licence to be an Authorised Market Institution; and
      b. an Authorised Market Institution.
      2. In every case, the Person must satisfy the DFSA that he is fit and proper. The DFSA will have regard to current, past and anticipated future factors.
      3. In this appendix an Authorised Market Institution includes an applicant for a Licence to be an Authorised Market Institution.

      AMI A1.2 An Authorised Market Institution

      AMI A1.2 Guidance

      Locations of offices and close links

      1. An Authorised Market Institution will need to satisfy the DFSA that it is in compliance with GEN chapter 6. In particular:
      a. GEN section 6.5 requires that if an Authorised Market Institution is a Body Corporate constituted under the laws of the DIFC it must maintain its head office and registered office in the DIFC. In considering the location of an Authorised Market Institution's head office, the DFSA shall have regard to the location of its Directors, partners, and senior management with respect to its strategic, operational and administrative arrangements.
      b. GEN section 6.6 concerns Close Links. The DFSA must be satisfied that the existence of Close Links do not prevent the effective supervision of the Authorised Market Institution by the DFSA. Where the DFSA is not satisfied concerning an Authorised Market Institution's Close Links, an application for a Licence or an extension of the scope of a Licence will not be granted, and an existing Licence may be revoked.

      General

      2. An Authorised Market Institution not satisfying the DFSA with respect to the location of its offices, Close Links and legal status (as applicable) will not be considered fit and proper.
      3. An Authorised Market Institution that satisfies the matters described under Guidance notes 1 and 2 above will also need to satisfy the DFSA with respect to its compliance with all applicable Rules including, but not limited to, the remaining matters detailed in Guidance notes 6 to 12 below.
      4. The DFSA will have regard to all relevant matters, whether arising in the DIFC or elsewhere. The DFSA will determine the materiality of any information for the purposes of considering whether an Authorised Market Institution has demonstrated, or continues to demonstrate, that it is fit and proper.
      5. In considering any specific matters, the DFSA may request reviews by any appropriately skilled third party on any aspect of the Authorised Market Institution's proposed or actual activities or the environment in which the applicant predominantly operates. The DFSA must agree the scope of any reviews performed and review its output, although such reviews will, ordinarily, need to be agreed beforehand to be at the applicant's sole expense.
      6.The DFSA may request or require any information which it considers relevant to its consideration of an application by an Authorised Market Institution.

      Background and history

      7. The DFSA will have regard to:
      a. any matter affecting the propriety of the Authorised Market Institution's conduct, whether or not such conduct may have resulted in the Commission of a criminal offence or the contravention of the law or the institution of legal or disciplinary proceedings of whatever nature;
      b. whether an Authorised Market Institution has ever been the subject of disciplinary procedures by a government body or agency or any self regulating organisation or other professional body;
      c. a contravention of any provision of Financial Services legislation or of rules, regulations, statements of Principle or codes of practice made under it or made by a recognised self regulatory organisation, Financial Services Regulator, Authorised Market Institution or regulated Exchange or clearing house;
      d. whether an Authorised Market Institution has been refused, or had a restriction placed on, the right to carry on a trade, business or profession requiring a Licence, registration or other permission;
      e. an adverse finding or an agreed settlement in a civil action by any Court or tribunal of competent jurisdiction resulting in an award against or payment by an Authorised Market Institution in excess of $10,000 or awards that total more than $10,000;
      f. whether an Authorised Market Institution has been censured, disciplined, publicly criticised or the subject of a Court order at the instigation of any regulatory authority, or any officially appointed inquiry, or any other Financial Services Regulator; or
      g. whether an Authorised Market Institution has been open and truthful in all its dealings with the DFSA.

      Ownership and group

      8. The DFSA will have regard to:
      a. the Authorised Market Institution's position within its Group, including any other relationships that may exist between the Authorised Market Institution's affiliates, Controllers, Associates or other Close Links;
      b. any information provided by other Regulators in relation to the Authorised Market Institution or any entity within its group;
      c. the background, history and principal activities of the Authorised Market Institution's Controllers, including that of the Controller's Directors, Partners or other officers associated with the Group, and the degree of influence that they are, or may be, able to exert over the Authorised Market Institution and/or its activities; or
      d. whether the Authorised Market Institution or its Group is subject to any adverse effect or considerations arising from its country of incorporation or the country (or countries) of incorporation of its Controllers. In considering such matters, the DFSA will also have regard to the type and level of regulatory oversight in the country or countries of incorporation referred to above, the regulatory infrastructure and adherence to internationally held conventions and standards that the DFSA has adopted in its Rules.

      Resources

      9. The DFSA will have regard to whether the Authorised Market Institution has sufficient resources of all types, including:
      a. the Authorised Market Institution's financial resources and whether it complies, or will comply, with any applicable financial Rules, and whether the Authorised Market Institution appears in a position to be able to continue to comply with such rules;
      b. the extent to which the Authorised Market Institution is or may be able to secure additional capital in a form acceptable to the DFSA where this appears likely to be necessary at any stage in the future;
      c. the availability of sufficient competent human resources to conduct and manage the Authorised Market Institution's affairs, in addition to having a sufficient type and number of Authorised Individuals to conduct and manage the Authorised Market Institution's Financial Services;
      d. whether the Authorised Market Institution has sufficient and appropriate systems and procedures in order to support, monitor and manage its affairs, resources and regulatory obligations in a sound and prudent manner;
      e. whether the Authorised Market Institution has appropriate anti Money Laundering procedures and systems designed to ensure full compliance with applicable Money Laundering legislation, including arrangements to ensure all relevant staff are aware of their obligations; and
      f. the impact of other Members of the Authorised Market Institution's Group on the adequacy of the Authorised Market Institution's resources and in particular, though not exclusively, the extent to which the Authorised Market Institution is or may be subject to consolidated prudential supervision by the DFSA or another Financial Services Regulator.

      The DFSA's Rulebook

      10. In assessing whether an Authorised Market Institution is fit and proper, the DFSA will also consider the degree to which the Authorised Market Institution is ready, willing and able to conduct the relevant activities in accordance with the Rules and other legislation applicable in the DIFC.
      11. In assessing whether an Authorised Market Institution is fit and proper, the DFSA will also consider the degree to which the Authorised Market Institution is ready, willing and able to conduct the relevant activities in accordance with the Rules and other legislation applicable in the DIFC. An Authorised Market Institution which fails to comply with any one or more Rules of the DFSA may also be in breach of one or more of the Licensing Requirements. Accordingly, the Authorised Market Institution may then be liable for disciplinary or enforcement action. In certain circumstances a breach of a rule or Principle may call into question whether that Person remains fit and proper.

      AMI App2 Member Identification Requirements

      AMI A2.1 Duties and responsibilities

      AMI A2.1 Guidance relating to rule 11.7.1

      1. Pursuant to rule 11.7.1, an Authorised Market Institution is required to be satisfied that a prospective Member is who he claims to be and obtain evidence to verify this.
      2. It is important for an Authorised Market Institution to obtain such information because this process should allow for the risk of being exploited for the purpose of Money Laundering to be reduced to a minimum.
      3. Any unusual facts of which an Authorised Market Institution becomes aware during the identification process may be an indication of Money Laundering and should prompt the Authorised Market Institution to request supplementary information and evidence.
      4. The following list, which is not meant to be exhaustive, should be considered as Guidance regarding the type of information and evidence which should be obtained by an Authorised Market Institution to establish and verify the identity of a Member.

      Individuals
      a. Evidence to be obtained in either documentary (hard copy) or electronic form:
      i. true full name or names used;
      ii. complete current permanent address, including all relevant details with regard to country of residence;
      iii. telephone, fax number and email address;
      iv. date and place of birth;
      v. nationality;
      vi. fiscal residence;
      vii. occupation or profession, name of employer and location of activity;
      viii. information regarding the nature of the business to be conducted;
      ix. information regarding the origin of the funds; and
      x. information regarding the source of wealth or income.
      b. The address of a prospective Member should enable an Authorised Market Institution to physically locate the Member. If P.O. Box numbers are customary to a country, additional methods of physically locating the Member should be applied.
      c. Documentary evidence of identity:
      i. current, signed passport;
      ii. current, signed ID card; or
      iii. other identification documentation that is customary in the country of residence, such as driving Licence, including a clear photograph of the prospective Member.
      d. An Authorised Market Institution should ensure that any documents used for the purpose of identification are original documents.
      e. Where personal identity documents, such as passport, ID card or other identification documentation cannot be obtained in original form, for example because an Authorised Market Institution has no physical contact with the Member the identification documentation provided should be certified as a true copy of the original document by any one of the following:
      i. a registered lawyer;
      ii. a registered notary;
      iii. a chartered accountant;
      iv. a government ministry;
      v. a post office;
      vi. a police officer; or
      vii. an embassy or consulate.
      f. The individual or authority Undertaking the certification under (e) should be contactable if necessary.
      g. Where a copy of an original identification document is made by an Authorised Market Institution, the copy should be dated, signed and marked with 'original sighted'.
      h. Documentary evidence of address:
      i. record of home visit;
      ii. confirmation from an electoral register search that a Person of such a name lives at that address;
      iii. tenancy agreement;
      iv. utility bill; or
      v. Local Authority tax bill.
      Unincorporated businesses or partnerships
      i. Evidence to be obtained in either documentary or electronic form:
      i. true full name or names;
      ii. complete current registered and trading address, including relevant details with regard to country of establishment;
      iii. telephone, fax number and email address;
      iv. fiscal residence;
      v. business activity;
      vi. information on the nature of the business to be conducted;
      vii. trading Licence, with renewal date;
      viii. list of authorised signatories of the business or partnership;
      ix. regulatory body, if applicable;
      x. information regarding the origin of funds; and
      xi. information regarding the source of wealth/income.
      j. Documentary evidence of identity:
      i. latest annual report and accounts, audited where applicable, and
      ii. certified copy of the Partnership deed, to ensure that it has a legitimate purpose and to ascertain the nature of the business or Partnership.
      k. Evidence of the trading address of the business or Partnership should be obtained and may be verified with a visit to the place of business.
      Corporate entities including financial or credit institutions
      l. Evidence to be obtained in either documentary or electronic form:
      i. registered corporate name and any trading names used;
      ii. complete current registered address and any separate principal trading addresses, including all relevant details with regard to country of residence;
      iii. telephone, fax number and email address;
      iv. date and place of incorporation;
      v. corporate registration number;
      vi. fiscal residence;
      vii. business activity;
      viii. regulatory body, if applicable;
      ix. name and address of Group, if applicable;
      x. legal form;
      xi. name of external auditor;
      xii. information regarding the nature and level of the business to be conducted;
      xiii. information regarding the origin of the funds; and
      xiv. information regarding the source of wealth/income.
      m. Documentary evidence of identity:
      i. copy of the extract of the register of the regulator or Exchange, or State law or edict creating the entity, in case of regulated, listed or state-owned companies;
      ii. certified copy of the articles of association or statutes;
      iii. certified copy of either the Certificate of incorporation or the trade register entry and the trading Licence including the renewal date;
      iv. latest annual report, audited and published if applicable;
      v. certified copies of the list of authorised signatories specifying who is authorised to act on behalf of the Member account and of the Board resolution authorising the signatories to operate the account;
      vi. certified copies of the identification documentation of the authorised signatories;
      vii. names, country of residence, nationality of Directors or partners and of the Members of the governing body; and
      viii. list of the main shareholders holding more than 5% of the issued capital.
      n. If the applying Member is not obliged to publish an audited annual report, adequate information about the financial accounts should be obtained.
      o. An Authorised Market Institution should verify that the applying Member is active and has not been, or is not in the process of being dissolved, wound-up or terminated.
      p. Pursuant to Rules 11.7.4, identification evidence is not required for Members which are Authorised Market Institutions.
      q. However, the confirmation of the existence of such a relevant firm or institution under Guidance note 2.s. above and its regulatory status should be verified by the Authorised Market Institution prior to entering into a Member relationship. Regular professional and commercial checks and due diligence investigations should still be performed.
      5. The DFSA will from time to time:
      a. review the Guidance under App2 in light of changing Money Laundering legislation issued by the u.a.e. Central Bank, Money Laundering trends and techniques and according to international standards, in order to keep the Guidance current; and
      b. provide such other Guidance as it deems appropriate regarding Member identification obligations.
      c. The DFSA expects that an Authorised Market Institution will take these changes into account by amending, as appropriate, its policies, procedures, systems and controls including its anti Money Laundering regime for Members.
      6. Sound Member identification arrangements have particular relevance to the safety and soundness of an Authorised Market Institution, in that:
      a. they help to protect its reputation and the integrity of the DIFC by reducing the likelihood of Authorised Market Institutions becoming a vehicle for, or a victim of, financial crime and suffering consequential reputational damage; and
      b. they constitute an essential part of sound risk management.
      7. In accordance with rule 11.7.1, an Authorised Market Institution should adopt a risk based approach for the Member identification and verification process. Depending on the Money Laundering risk assessment regarding the Authorised Market Institution's Member, the Authorised Market Institution should decide to what level of detail the Member identification and verification process will need to be performed. See also Rules under section 11.10. The risk assessment regarding a Member should be recorded in the Member file.
      8. The risk-based approach does not release an Authorised Market Institution from its overall obligation to identify fully and obtain evidence of Member identification to the DFSA's satisfaction.
      9. An Authorised Market Institution is advised that in cases of doubt it should adopt a stricter rather than a moderate approach in its judgement concerning the risk level and the level of detail to which Member identification is performed and evidence obtained.

      AMI A2.1 Guidance relating to rule 11.7.3.

      10. Pursuant to rule 11.7.3, an Authorised Market Institution must ensure that the information and evidence concerning a Member's identity is accurate and up-to-date.
      a. An Authorised Market Institution is expected to ensure that the information and the evidence obtained from a Member is valid and has not expired, for example, when obtaining copies of identification documentation such as a passport or trading Licence.
      b. The Member identification process does not end at the point of application. Following the start of the Member relationship, an Authorised Market Institution should ensure that all relevant evidence and information is kept upto- date including, for example, the list of authorised signatories who can act on behalf of a corporate Member.
      c. If a Member account is dormant or an Authorised Market Institution has had no contact with the Member within the previous twelve months, an Authorised Market Institution should take reasonable steps to verify whether available information, documentation and evidence concerning the Member is still valid and up-to-date.

      AMI App3 Money Laundering Risks

      AMI A3.1 Risk assessment

      AMI A3.1 Guidance relating to rule 11.10.1

      1. The Securities sector on a global scale is characterised by its diversity, the ease with which trading can take place (through electronic trading for example) and the ability to perform transactions in markets with little regard to national borders. These characteristics, along with the sheer volume of transactions, also make the Securities sector potentially vulnerable to the laundering of funds. The Securities sector is to be understood in the broader sense and shall include all trading and Related activities relating to Investments.
      2. The illegal funds laundered through the Securities sector may be generated by illegal activities both from outside and from within the sector. For illegal funds generated outside the sector, Securities transactions or the creation of legal entities a re used as the mechanism for concealing or obscuring the source of these funds. In the case of illegal activities carried out within the Securities market itself, for example, embezzlement, insider trading, Securities fraud, market manipulation, terrorist financing etc., the Securities transactions or manipulations generate illegal funds that must then be laundered.
      3. Funds in the form of cash are generally introduced into the financial system before entering the Securities sector. Consequently, the Securities sector is less at risk than the banking sector regarding the placement of laundered funds directly into the Securities industry. However, the Securities sector is especially vulnerable to the layering of laundered funds subsequent to the placement phase.
      4. Generally, an Authorised Market Institution is expected to take a risk-based approach when assessing any business relationship or Transaction with respect to its specific Money Laundering risk and the information and evidence that might be required or validated for this purpose. 'Know Your Member' procedures need to be established and managed according to the perceived Money Laundering risk.
      5.
      a. The Authorised Market Institution should take specific and adequate measures necessary to compensate for the higher risk of Money Laundering which might arise, for example from the following products, services or Members:
      i. "Wash sales" or other fictitious trading schemes to transfer Money or value through the clearing and settlement infrastructure;
      ii. activities of Employees that unwittingly are requested to take actions which further a Person's Money Laundering scheme; including the activities of "rogue employees";
      iii. acceptance of orders and Related funds from intermediaries or Banks operating from jurisdictions that do not have effective systems in place to prevent the introduction of laundered funds into the Investment firms and Banks operating in those jurisdictions;
      iv. non face-to-face business relationships or transactions, such as via mail, telephone or the Internet;
      v. correspondent banking relationships, see also rule 11.7.9;
      vi. Members from FATF 'Non Cooperative Countries and Territories' and higher-risk countries, see also Guidance under section 11.9; and
      vii. Politically Exposed Persons, see also rule 11.10.2
      b. Pursuant to rule 11.10.3, an Authorised Market Institution should apply an intensified monitoring of transactions and accounts in relation to these products, services and Members.
      6. While an Authorised Market Institution should assess the Money Laundering risks posed by the products and services it offers and devise its products with due regard to those risks, a risk-based approach does not release the Authorised Market Institution from its overall obligation to comply with anti Money Laundering obligations.
      7. Money Laundering risks are increased if a Person is able to hide behind corporate structures such as limited companies, offshore trusts, special purpose vehicles and nominee arrangements. When devising its internal procedures, an Authorised Market Institution should consider how its Members and operational systems impact upon the capacity of its staff to identify suspicious transactions.
      8. The geographical location of an Authorised Market Institution's Member may also affect the Money Laundering risk assessment. The DFSA recommends that where an Authorised Market Institution has Members located in countries:
      a. without adequate anti Money Laundering strategies;
      b. where cash is the normal medium of exchange;
      c. which have a politically unstable regime with high levels of public or private sector corruption;
      d. which are known to be drug producing or drug transit countries; or
      e. which have been classified as countries with inadequacies in their anti Money Laundering regulations, see Guidance under section 11.9;
      it should consider which additional 'Know Your Member' and monitoring procedures might be necessary to compensate for the enhanced risks of Money Laundering. Such measures may encompass, for example, the following:
      f. requiring additional documentary evidence;
      g. taking supplementary measures to verify or certify the documents supplied; or
      h. performing direct mailing of account opening documentation to a Member at an independently verified address.

      AMI A3.2 Risks regarding corruption and politically exposed persons

      AMI A3.2 Guidance relating to rule 11.10.2

      1. Corruption, especially with the involvement of Politically Exposed Persons, may involve serious crimes and has become the subject of increasing global concern. The risk for an Authorised Market Institution can be reduced if the Authorised Market Institution conducts detailed 'Know Your Member' investigations at the beginning of a relationship with an Individual and on an ongoing basis where it knows, suspects, or is advised that, the business relationship involves a Politically Exposed Person. An Authorised Market Institution should develop and maintain enhanced scrutiny and monitoring practices to address this risk, see also App2.
      2. Where a Member relationship is maintained with a PEP, detailed monitoring and due diligence procedures should include:
      a. analysis of any complex structures, for example involving trusts or multiple jurisdictions;
      b. appropriate measures to establish the source of wealth;
      c. development of a profile of expected activity for the business relationship in order to provide a basis for Transaction and account monitoring;
      d. senior management approval for the Member relationship; and
      e. regular oversight of the relationship with a Politically Exposed Person by senior management.
      3. An Authorised Market Institution is advised that Member relationships with family Members or close Associates of Politically Exposed Persons involve similar risks to those with Politically Exposed Persons themselves.

      AMI A3.3 Suspicious transactions and Transaction monitoring

      AMI A3.3 Guidance relating to rule 11.10.3

      1.
      a. The Rules in section 11.8 require a suspicious transaction report to be made when there is knowledge or suspicion of Money Laundering. Suspicion is a personal and subjective assessment. Suspicion of Money Laundering requires a degree of satisfaction although this may not amount to belief, it should at least extend beyond mere speculation and should be based upon some foundation that Money Laundering has occurred or is about to occur.
      b. A Member of staff who considers a Transaction to be suspicious would not be expected to know the exact nature of the criminal offence or that the particular funds were definitely those arising from the crime.
      c. The Rules in section 11.8 also make reference to 'reasonable grounds to suspect' which introduces an objective test rather than a subjective test of suspicion by assessing whether or not 'suspicion' was ignored in the way of:
      i. wilful blindness;
      ii. negligence, that is wilfully and recklessly failing to make the adequate enquiries; or
      iii. failing to assess adequately the facts and information that are either presented or available.
      2. Circumstances that might give rise to suspicion or reasonable grounds for suspicion may be:
      a. transactions which have no apparent purpose and which make no obvious economic sense;
      b. transactions requested by a Member without reasonable explanation, which are out of the ordinary range of services normally requested or are outside the experience of an Authorised Market Institution in relation to a particular Member or Person;
      c. the size or pattern of transactions, without reasonable explanation, is out of line with any pattern that has previously emerged;
      d. a Member or Person refuses to provide the information requested without reasonable explanation;
      e. a Member or Person who has just entered into a business relationship uses the relationship for a single Transaction or for only a very short period of time;
      f. an extensive use of offshore accounts, companies or structures in circumstances where the Member's economic needs do not support such requirements;
      g. unnecessary routing of funds through third party accounts; or
      h. unusual Transactions without an apparently profitable motive.

    • Annex B Recognition (REC)

      This Annex contains all the Rules comprising the new REC module. As the entire module consists of new Rules, the text is not underlined.

      REC 1 Application of REC

      REC 1.1 Application

      REC 1.1.1

      This module (REC) applies to every Person to whom the Regulatory Law applies and to the same extent in relation to every such Person as that Law, except to the extent that a provision of REC provides for a narrower application.

      REC 1.1.1 Guidance

      1. This module is divided into three parts. REC Part 1 (chapters 2 - 6) sets out details of the regulatory framework that applies to Recognised Bodies and applicants for such status. REC part 2 (chapters 7 - 9) sets out details of the process for Recognition as a Recognised Member. REC Part 3 (chapter 10) sets out general provisions which apply to both Recognised Bodies and Recognised Members.
      2. References to Articles made in this module are references to Articles in the Regulatory Law 2004 unless otherwise stated.

      REC Part 1 Recognised Bodies

      REC 2 Introduction

      REC 2.1 Application

      REC 2.1.1

      This Part applies to every Recognised Body and every Person who proposes to become a Recognised Body.

      REC 2.1.1 Guidance

      1. Recognised Bodies are Exchanges, Clearing Houses and settlement facilities which carry on Financial Services in or from the DIFC without having a physical presence in the DIFC. If those bodies did have a physical presence in the DIFC they would need to be licensed as an Authorised Market Institution. The Recognised Body regime set out in this module provides for those Recognised Bodies to simply be recognised.
      2. The effect of the Financial Services prohibition contained in Article 41(2) of the Law is that, subject to certain exceptions, a Person shall not carry on a Financial Service in or from the DIFC. Article 41(6) provides for an exception in respect of Recognised Bodies who are exempt from the Financial Services prohibition in respect of Financial Services specified in their Recognition Notice.
      3. Chapter 3 of this module sets out the manner in which an application for a Recognition Notice may be made. rule 3.2.1 provides that the Recognition Notice may specify either or both of the Financial Services of Operating an Exchange or of Operating a Clearing House.
      4. Chapter 4 sets out the Recognition Requirements which all Recognised Bodies must meet while chapters 5 and 6 set out the obligations of, and general provisions applying to, Recognised Bodies.
      5. The Recognised Body regime is designed to reduce the day-to-day involvement of the DFSA in the supervision of these types of body and to allow the DFSA to rely substantially on the supervisory and regulatory arrangements in the country where the applicant's head office is situated.
      6. The following parts of the DFSA Rulebook also apply to Recognised Bodies:

      Module Applicable chapters
      Gen (GEN) 1, 2, 3, 6 and 7
      Enforcement (ENF) All chapters

      REC 3 Recognition

      REC 3.1 Application

      REC 3.1.1

      This chapter applies to a Recognised Body and an applicant for Recognition as a Recognised Body.

      REC 3.2 Application for Recognition as a Recognised Body

      REC 3.2.1

      A Person, referred to in this chapter as an applicant, who intends to carry on either or both of the Financial Services of Operating an Exchange or of Operating a Clearing House as a Recognised Body must apply to the DFSA for Recognition in accordance with the Rules in this chapter.

      REC 3.2.1 Guidance

      An applicant, or potential applicant, to be a Recognised Body in relation to the activities prescribed by rule 3.2.1 is advised to contact the DFSA to discuss their application at the earliest possible occasion and prior to the submission of any written documentation. In particular, the appropriateness of such Recognition will be discussed in relation to the proposed business activities.

      REC 3.2.2

      An applicant for Recognition must be:

      (a) licensed or authorised to operate an Exchange, Clearing House or settlement facility in a jurisdiction acceptable to the DFSA,
      but must not be:
      (b) an Authorised Firm or an applicant to be an Authorised Firm; or
      (c) an Authorised Market Institution or an applicant to be an Authorised Market Institution.

      REC 3.2.2 Guidance

      In determining whether the jurisdiction is acceptable to the DFSA, the DFSA will place primary importance on the standard of Regulation in that jurisdiction and will consider whether there are adequate arrangements in place for co-operation between the DFSA and the relevant Financial Services Regulator. These arrangements will normally take the form of a memorandum of understanding between the DFSA and the Financial Services Regulator.

      REC 3.2.3

      An applicant for Recognition must submit a written application to the DFSA demonstrating:

      (a) how the applicant satisfies or intends to satisfy the Recognition requirements and any other requirements applicable to it;
      (b) a twelve month business plan for the operations in the DIFC; and
      (c) copies of any agreements relied upon to satisfy the Recognition requirements.

      REC 3.2.3 Guidance

      A Person submitting an application must also pay the appropriate application Fees as set out in GEN 7.

      REC 3.2.4

      An applicant will only be Recognised to carry on either or both of the Financial Services of Operating an Exchange or of Operating a Clearing House if the DFSA is satisfied that the applicant:

      (a) has satisfied the Recognition requirements in relation to the nature of the Financial Services concerned;
      (b) is fit and proper, taking into account amongst all other factors, the ownership and control of the applicant; and
      (c) will conduct and manage its affairs in a sound and prudent manner.

      REC 3.2.5

      In assessing an application for Recognition the DFSA may:

      (a) carry out any enquiries which it considers appropriate including enquiries independent of the applicant;
      (b) require the applicant to submit additional information;
      (c) require any information submitted by the applicant to be verified in such manner as the DFSA may specify; and
      (d) take into account any information which the DFSA considers appropriate in relation to the applicant.

      REC 3.2.6

      If an applicant becomes aware of a material change in circumstances that is reasonably likely to be relevant to an application which is under consideration by the DFSA, it must inform the DFSA of the change, in writing, without delay.

      REC 3.3 Change of scope of recognition

      REC 3.3.1

      A Recognised Body applying to change the scope of its Recognition, or to have a condition or restriction varied or withdrawn, must provide the DFSA with sufficient written details for it to be able to consider the change, variation or withdrawal in respect of the Recognition requirements.

      REC 3.3.1 Guidance

      Where a Recognised Body applies to change the scope of its Recognition, it should provide a revised business plan describing the basis of, and rationale for, the proposed change and evidence that the Recognition Requirements will still be satisfied.

      REC 3.3.2

      A Recognised Body seeking to have its Recognition revoked must submit a request in writing stating:

      (a) the reasons for the request;
      (b) that it has ceased or will cease to carry on Financial Services in or from the DIFC;
      (c) the date on which it ceased or will cease to carry on Financial Services in or from the DIFC; and
      (d) that it has discharged, or will discharge, all obligations owed to its direct and indirect users in respect of whom the Recognised Body has carried on, or will cease to carry on Financial Services in or from the DIFC.

      REC 3.4 Determination of applications and appeals

      REC 3.4 Guidance

      Determination of Applications

      1. Article 61(7) states the DFSA may refuse to grant Recognition or a change to the scope of an existing Recognition
      2. Article 61(8) states that the DFSA may grant an application for Recognition or a change to the scope of Recognition, with or without conditions and restrictions either with an applicant's agreement or by imposition.
      3. Under Article 61(9), the DFSA may revoke Recognition on its own initiative by means of a Revocation Notice or at the request of a Recognised Body. Pursuant to Article 61(11), the DFSA will provide a Recognised Body with an opportunity to make representations prior to issuing a Revocation Notice unless, in accordance with Article 61(12) any delay would be prejudicial to the interests to the DIFC.
      4. Upon determination of an application under Articles 61(7) (8) or (9), as referred to above, the DFSA will without undue delay notify the applicant or Recognised Body in writing of its decision.

      Appeals

      5. Under Article 27, an applicant or a Recognised Body may appeal against any determination by the DFSA in relation to:
      a. an application for Recognition or for an extension of Recognition;
      b. an imposition, variation or withdrawal of a condition or restriction to a Recognition; and
      c. the exercise of the DFSA's power to revoke Recognition.
      6. Under Article 28, an applicant or Recognised Body wishing to appeal must submit a written notice of appeal within 30 days of the notification of the relevant decision, or within a further period not exceeding 30 days as approved by the Regulatory Appeals Committee.
      7. The form of submission that an appeal must take is specified in the rules of procedures of the Regulatory Appeals Committee.

      REC 4 Recognition Requirements

      REC 4.1 Application

      REC 4.1.1

      This chapter applies to a Recognised Body and an applicant for Recognition as a Recognised Body.

      REC 4.2 Recognition requirements

      REC 4.2.1

      A Recognised Body must satisfy the Recognition requirements contained in the Rules in this section to the satisfaction of the DFSA at the time of Recognition and at all times thereafter while Recognised.

      Maintenance of standards

      REC 4.2.2

      A Recognised Body must operate to a standard which would satisfy the Licensing Requirements for Authorised Market Institutions set out in AMI, insofar as the Licensing Requirements are applicable to the Recognised Body.

      REC 4.2.2 Guidance

      1. The Licensing Requirements for Authorised Market Institutions are set out in AMI and include requirements relating to:
      a. financial resources;
      b. systems and controls;
      c. general safeguards for investors; and
      d. Transaction recording.
      2. In particular, the DFSA will consider how the Recognised Body is able and willing to promote high standards of integrity and fair dealing. In this consideration, the DFSA will have regard to:
      a. the extent to which a Recognised Body seeks to promote and encourage such standards through its rules, procedures and practices; and
      b. any other applicable rules and principles which apply to the carrying on of business on its facilities.
      3. The DFSA will pay special attention to the systems and controls in place within the Recognised Body designed to ensure the Recognised Body as an effective anti Money Laundering regime. The Recognised Body should be able to demonstrate at all times that it complies with any relevant anti Money Laundering laws and regulations which apply to it in its home jurisdiction.

      Relations with regulators

      REC 4.2.3

      A Recognised Body must:

      (a) deal with the DFSA and Financial Services Regulators in an open and co-operative manner; and
      (b) keep the DFSA promptly informed of significant events or anything else relating to the Recognised Body of which the DFSA would reasonably expect to be notified.

      REC 4.2.3 Guidance

      In assessing the ability and willingness of a Recognised Body to co-operate with the DFSA and other Financial Services Regulators, the DFSA may have regard to:

      a. the agreements in place between persons granted access to the facilities and the Recognised Body for obtaining information;
      b. the extent to which the Recognised Body is open and co-operative with the DFSA and other Financial Services Regulators with regards to regulatory matters; and
      c. how diligently the Recognised Body responds to enquiries from the DFSA or other regulatory authorities.

      REC 5 Supervision

      REC 5.1 Application

      REC 5.1.1

      This chapter applies to every Recognised Body.

      REC 5.2 General approach

      REC 5.2.1 Supervisory approach and the reporting statement

      REC 5.2.1 Guidance

      1. The DFSA will rely upon the lead Financial Services Regulator to act as the primary regulator of the Recognised Body. The focus of DFSA's interest will be on activities carried on in the DIFC or those activities of the Regulated Body that may have an impact on the DIFC. This section sets out the DFSA's supervisory approach in that regard.
      2. Many of the requirements contained in this section are likely to be equivalent to requirements to which a Recognised Body is subject in its home jurisdiction. Therefore, the DFSA may accept copies of submissions or information provided to the other Financial Services Regulator in satisfaction of the requirement in this chapter.

      REC 5.2.2

      A Recognised Body must notify the DFSA immediately of any event that may cause it to be unable to satisfy the Recognition Requirements.

      REC 5.2.2 Guidance

      1. An example of an event that may immediately cause a Recognised Body to be unable to satisfy the Recognition Requirements is where a Recognised Body is served notice that its relevant permission in its home jurisdiction has been or is about to be:
      a. withdrawn or revoked; or
      b. modified in any way which would materially restrict the Recognised Body in performing a Financial Service in the DIFC or its home territory.
      2. Other examples which may cause a Recognised Body to be unable to meet the requirements include significant changes to any relevant law or Regulation in its home territory, which:
      a. governs Exchanges or clearing houses;
      b. is designed to prevent Market Misconduct or Money laundering;
      c. affects the ability of the Recognised Body to seek information from its users or to provide information to the DFSA; or
      d. requires significant changes to the Recognised Body's organisation, structure or practices.

      REC 5.2.3

      (1) A Recognised Body must provide the DFSA with a reporting statement at least once a year, at a date or dates agreed during the application process or thereafter, which contains, in relation to the period to which the reporting statement relates:
      (a) confirmation that the Recognised Body is licensed or authorised as required by rule 3.2.2;
      (b) confirmation that the Recognised Body is satisfying the Recognition requirements and has satisfied the Recognition requirements throughout the period;
      (c) particulars of changes to its:
      (i) memorandum and articles of association or any similar constitutional documents;
      (ii) organisation, structure and practices; and
      (iii) Governing Body; and
      (d) particulars of any disciplinary action, or any other action, taken against it by any supervisory authority in any jurisdiction to which it is subject, whether or not that action has been made public, where such action:
      (i) relates to conduct carried in or from the DIFC; or
      (ii) is of such a nature that the DFSA would reasonably expect to be notified.
      (2) A Recognised Body must provide to the DFSA a copy of its annual report and accounts, including any consolidated annual report and accounts of any Group of which the Recognised Body is a Member at the time it provides such documents to its Financial Services Regulator in its home jurisdiction.

      REC 5.2.3 Guidance

      If a Recognised Body is required to provide a reporting statement in accordance with rule 5.2.3(1) at or around the same time as it is required to provide an annual report in accordance with rule 5.2.3(2), the DFSA will accept the annual report as satisfying the requirement in (1) insofar as the information is contained in the annual report.

      REC 5.3 General notification requirements

      REC 5.3.1

      A Recognised Body must provide the DFSA with a copy of any information provided to any Financial Services Regulator to which the Recognised Body is subject and which is relevant to Financial Services carried on in or from the DIFC.

      REC 5.4 Core information

      REC 5.4.1

      A Recognised Body must provide the DFSA with reasonable advance notice of a change in:

      (a) the Recognised Body's name;
      (b) any business name under which the Recognised Body carries on a Financial Service in or from the DIFC;
      (c) the address of the Recognised Body's registered office or head office;
      (d) its legal structure; or
      (e) its financial year.

      REC 5.5 Other regulators

      REC 5.5.1

      A Recognised Body must advise the DFSA immediately upon:

      (a) the granting, modification, variation, withdrawal or refusal of any application for, or revocation of, licensing, Recognition or authorisation:
      (i) in the jurisdiction in which the Recognised Body has its head office or principal business; and
      (ii) in any other jurisdiction to the extent that the relevant licensing, Recognition or authorisation relates to Operating an Exchange, Clearing House or settlement facility;
      (b) the granting, withdrawal or refusal of an application for, or revocation of, membership of the Recognised Body by any regulated Exchange or clearing house;
      (c) the Recognised Body becoming aware that a Financial Services Regulator has started an investigation into the affairs of the Recognised Body;
      (d) the appointment of inspectors, howsoever named, by a Financial Services Regulator to investigate the affairs of the Recognised Body; or
      (e) the imposition of disciplinary measures or disciplinary sanctions on the Recognised Body in relation to its Financial Services by any Financial Services Regulator.

      REC 5.5.1 Guidance

      The DFSA does not require advice from a Recognised Body for the purposes of rule 5.5.1(c) or (d) where the activities of the Financial Services regulator are part of a routine or regular inspection or audit of the affairs of the Recognised Body.

      REC 5.6 Insolvency and dissolution provisions

      REC 5.6.1

      A Recognised Body must notify the DFSA immediately upon:

      (a) the calling of a meeting to consider a resolution for winding up the Recognised Body;
      (b) an application to dissolve the Recognised Body or to strike it from the corporate register in its home jurisdiction;
      (c) the presentation of a petition for the winding up of the Recognised Body;
      (d) the making of, or any proposals for the making of, a composition or arrangement with creditors of the Recognised Body; or
      (e) the application by any Person for the commencement of any insolvency proceedings, appointment of any receiver, administrator or provisional liquidator under the law of any country; or
      (f) any other event relating to the insolvency of the Recognised Body.

      REC Part 2 Recognised Members

      REC 6 Introduction

      REC 6.1 Application

      REC 6.1.1

      This Part applies to every Recognised Member and every Person who proposes to become a Recognised Member.

      REC 6.1.1 Guidance

      1. Recognised Members are Members of an Authorised Market Institution who have no physical presence in the DIFC. If those Members did have a physical presence in the DIFC they may need to be licensed as an Authorised Firm. The Recognised Member regime set out in this module provides for those Recognised Members to be recognised instead.
      2. The Financial Services prohibition contained in Article 41(2) of the Law provides that a Person shall not carry on a Financial Service in or from the DIFC. However, Article 41(7) provides that Recognised Members are exempt from that prohibition in respect of Financial Services as specified by their Recognition Notice.
      3. Chapter 8 of this module sets out the manner in which an application for a Recognition Notice may be made. Chapter 9 sets out the information the DFSA requires from Recognised Members for a Recognition Notice to be issued. Chapter 10 sets out the obligations of Recognised Members.
      4. The following parts of the DFSA Rulebook also apply to Recognised Members:

      Module Applicable chapters
      General (GEN) 1, 2 and 6
      Enforcement (ENF) All chapters

      REC 7 Recognition

      REC 7.1 Application

      REC 7.1.1

      This chapter applies to a Recognised Member and an applicant for Recognition as a Recognised Member.

      REC 7.2 Application for Recognition as a Recognised Member

      REC 7.2.1

      A Person, referred to in this chapter as an applicant, who intends to carry on Financial Services in the DIFC for the purposes of, or in connection with, trading on or using the facilities of an Authorised Market Institution must apply for Recognition in accordance with the Rules in this chapter.

      REC 7.2.1 Guidance

      An applicant, or potential applicant, to be a Recognised Member in relation to the activities prescribed by rule 8.2.1 is advised to contact the DFSA to discuss their application at the earliest possible notice and prior to the submission of any written documentation. In particular, the appropriateness of such Recognition will be discussed in relation to the proposed business activities.

      REC 7.2.2

      An applicant for Recognition must not be:

      (a) an Authorised Firm or an applicant to be an Authorised Firm; or
      (b) an Authorised Market Institution or an applicant to be an Authorised Market Institution
      and must:
      (c) be licensed or authorised to perform the Financial Services it will be carrying on in the DIFC in another jurisdiction outside of the DIFC;
      (d) be regulated in respect of those activities in (c) by a Financial Services Regulator to a standard satisfactory to the DFSA;
      (e) have its head and registered offices outside of the DIFC; and
      (f) be a Member of, or authorised to use the facilities of, an Authorised Market Institution, subject to being granted Recognition by the DFSA.

      REC 7.2.2 Guidance

      1. In determining whether the Financial Services Regulator is satisfactory to the DFSA, the DFSA will consider whether there are adequate arrangements in place for cooperation between the DFSA and the Financial Services Regulator. These arrangements will normally take the form of a memorandum of understanding between the DFSA and the Financial Services Regulator.
      2. The DFSA will accept an agreement in Principle from the Authorised Market Institution under 8.2.2(f).

      REC 7.2.3

      An applicant for Recognition must submit a written application to the DFSA with:

      (a) evidence of its licensed or authorised status outside of the DIFC jurisdiction; and
      (b) the information required by chapter 9.

      REC 7.2.3 Guidance

      Upon determination of an application for Recognition the DFSA will without undue delay notify the applicant in writing of its decision.

      REC 8 Information Required for Recognition

      REC 8.1 Application

      REC 8.1.1

      This chapter applies to a Recognised Member and an applicant for Recognition as a Recognised Member.

      REC 8.2 Information requirements

      REC 8.2.1

      A Recognised Member or an applicant must provide the DFSA with:

      (a) its name;
      (b) any business name under which it carries on a Financial Service in or from the DIFC;
      (c) the address of its registered office and head office;
      (d) the name of any Exchange or Clearing House on which it is carrying on financial services;
      (e) the name of the Authorised Market Institution on which it will carry on Financial Services; and
      (f) any unique code or unique identifier it will use when carrying on business on or through the Authorised Market Institution.

      REC 9 Supervision

      REC 9.1 Application

      REC 9.1.1

      This chapter applies to a Recognised Member.

      REC 9.2 General approach

      REC 9.2.1

      A Recognised Member must provide the DFSA with reasonable advance notice of:

      (a) any change to the information provided under rule 8.2.1; or
      (b) the granting, withdrawal or refusal of an application for, or revocation of membership of an Exchange or Clearing House.

      REC 9.3 General notification requirements

      REC 9.3.1

      A Recognised Member must provide the DFSA with a copy of any information provided to any Financial Services Regulator to which the Recognised Member is subject and which is relevant to Financial Services carried on in or from the DIFC.

      REC Part 3 General Provisions

      REC 10 General Provisions

      REC 10.1 Application

      REC 10.1.1

      This chapter applies to every Person to whom Part 1 or Part 2 applies.

      REC 10.2 Waivers and modifications

      REC 10.2.1

      If a Person wishes to apply for a waiver or modification it must apply in writing to the DFSA and the written application must contain:

      (a) the name of the Person;
      (b) the rule to which the application relates;
      (c) a clear explanation of the waiver or modification that is being applied for and the reason why the Person is requesting the waiver;
      (d) details of any other requirements, for example, if there is a specific period for which the waiver or modification is required;
      (e) if the Person has any reason why the waiver or modification should not be published or why it should be published without disclosing the identity of the Person; and
      (f) all relevant facts to support the submission.

      REC 10.2.1 Guidance

      1. Under Article 25, the DFSA may by means of a written notice provide that one or more provisions of the Rules either:
      a. shall not apply to a particular person; or
      b. shall apply to a particular Person with such modifications as are set out in the written notice.
      2. Under the Law, unless the DFSA is satisfied that it is inappropriate or unnecessary to do so, the DFSA must publish a waiver or modification in such a way it considers appropriate for bringing the notice to the attention of:
      a. those likely to be affected by it; or
      b. others who may be likely to become subject to a similar notice.
      3. The principal method of publication of waivers or modifications is by publication on the DFSA website.

      REC 10.3 Accuracy of information

      REC 10.3 Guidance

      Article 66 of the Law states that a Person shall not:

      a. provide information that is false, misleading or deceptive to the DFSA; or
      b. conceal information where the concealment of such information is likely to mislead or deceive the DFSA.

      REC 10.3.1

      A Person must take reasonable steps to ensure that all information that it provides to the DFSA in accordance with any legislation applicable in the DIFC 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 DFSA would reasonably expect to be notified.

      REC 10.3.2

      (1) A Person must notify the DFSA immediately it becomes aware, or has information that reasonably suggests, that it:
      (a) has or may have provided the DFSA 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.

      REC 10.4 Provision of notifications

      REC 10.4.1

      (1) Unless a rule states otherwise, a Person must ensure that each notification it provides to the DFSA is:
      (a) in writing and contains the Person's name and Recognition number; and
      (b) addressed for the attention of the Markets Division and delivered to the DFSA by:
      (i) post to the current address of the DFSA;
      (ii) hand to the current address of the DFSA;
      (iii) electronic mail to an address provided by the DFSA; or
      (iv) fax to a fax number provided by the DFSA.
      (2) In (1)(b) confirmation of receipt must be obtained.

    • Annex C Offered Securities Rules (OSR)

      This Annex contains all the Rules comprising the new OSR module. As the entire module consists of new Rules, the text is not underlined.

      OSR 1 Introduction

      OSR 1.1 Application

      OSR 1.1.1

      This module, OSR, applies to every Person to whom the Markets Law applies and to the same extent in relation to every such Person as that law, except to the extent that a provision of OSR provides for a narrower application.

      OSR 1.1.2

      Where a rule prescribes a requirement on an Undertaking, each Director, Partner or other Person charged with the management of that Undertaking must take all reasonable steps within its control to secure compliance with the requirement by the Undertaking.

      OSR 1.1.3

      Where a rule prescribes a requirement relating to a Director, Partner or Employee of an Undertaking:

      (a) the Director, Partner or Employee (as the case may be) is bound to take all steps reasonable within his control to secure compliance with the requirement; and
      (b) the Undertaking is responsible for ensuring compliance with the requirement.

      OSR 1.2 Overview of module

      OSR 1.2 Guidance

      Introduction

      1. The Markets Law of 2004 makes provision for the Regulation of Offers of Securities in or from the DIFC, together with the initial and ongoing responsibilities of Offerors and Reporting Entities.
      2. This module further defines the concepts of Offer and Exempt Offer and also contains Rules relating to initial disclosure, continuing disclosure and other obligations that arise at the time of, or as a result of, Offering or Listing Securities.
      3. The structure of the module is organised so that the main provisions are contained in each of the chapters, which are linked to appendices at the back of the module, detailing the requirements relating to the various product-specific Categories including Shares, Debentures, Certificates, Warrants and other financial products.

      Offers

      4. The Rules in chapter 2 further define Offer by prescribing certain offers for the sale of Securities as constituting an Offer. The Rules in that chapter also define Exempt Offers and provide for a particular Class of Exempt Offer to which the standard Exempt Offer requirements set out in chapter 3 do not apply.

      Obligations

      5. Chapter 4 sets out specific requirements that apply to Prospectus Offers. Chapters 5 and 6 provide further requirements in respect of Listings.
      6. Chapter 7 sets out the common Prospectus requirements, and chapter 8 provides the Rules in respect of responsibility for Prospectuses.
      7. Chapter 9 sets out the ongoing responsibilities of Reporting Entities. Chapter 10 provides for disclosures by Connected Persons.

      Sponsors

      8. Chapter 11 contains Rules in respect of the appointment, termination and obligations of sponsors.

      General Provisions

      9. Chapters 12, 13 and 14 complete the regulatory scheme by setting out Rules relating to contraventions, Fees and applications for waivers and modifications.

      OSR 1.3 Interpretation

      OSR 1.3 Guidance

      Sections 6.1, 6.2 and 6.7 of GEN apply to those to whom this module applies. Those sections provide, amongst other things, Rules to be applied in the interpretation of this and other modules of the DFSA Rulebook.

      OSR 2 Offers of Securities

      OSR 2.1 Application

      OSR 2.1.1

      This chapter applies to every Person to whom the Markets Law applies and to the same extent in relation to every such Person as that law.

      OSR 2.2 Offers

      OSR 2.2 Guidance

      Article 13(2) of the Markets Law reads as follows:

      A Person is to be regarded as making an Offer of Securities in or from the DIFC if he:

      (a) as principal makes an Offer which, if accepted, would give rise to a contract for the issue of Securities by him or by another Person with whom he has made arrangements for the issue of Securities; or
      (b) makes an Offer or invitation in relation to an issue or sale of Securities in circumstances prescribed by the Offered Securities Rules.

      OSR 2.2.1

      (1) The DFSA, for the purposes of Article 13(2)(b) of the Markets Law 2004, prescribes the following activities, in relation to a sale of Securities, as constituting an Offer:
      (a)
      (i) where a Person makes an Offer to another Person which, if accepted, would give rise to a contract for the sale of Securities by him or by another Person with whom he has made arrangements for the sale of Securities; or
      (ii) where a Person (the 'first Person') invites another Person to make an Offer which, if accepted by the first Person, would give rise to a contract for the sale of Securities by him or by another Person with whom he has made arrangements for the sale of Securities; and
      (b) the Offer or invitation is a financial promotion of the Securities.
      (2) For the purposes of (1):
      (a) the mere Listing of a Security does not amount to an invitation or an offer; and
      (b) an invitation or Offer of a Unit by an Authorised Firm does not amount to an Offer.
      (3) In (1) a financial promotion is an advertisement or any other form of promotion or marketing inviting a Person to:
      (a) enter into an agreement;
      (b) Offer to enter into an agreement; or
      (c) exercise any rights conferred by a Security;
      to acquire, dispose of, underwrite or convert a Security.
      (4) In (3) the financial promotion may be communicated in any manner including, but not limited to, the following:
      (a) orally;
      (b) electronically; or
      (c) in writing.
      (5) For the purposes of (1) and (3) where a Body Corporate:
      (a) has Securities which are Listed; or
      (b) has Securities which are Unlisted but a Prospectus has been filed in relation to those Securities
      and it issues information as a Reporting Entity in accordance with the requirements of OSR, disclosure of such information is not a financial promotion provided the disclosure of the information does not:
      (c) include an express invitation or offer; or
      (d) contain information calculated to encourage or lead a Person,
      to engage in any of the activities specified in (3) (a), (b) or (c).

      OSR 2.2.1 Guidance

      1. The DFSA also considers that financial promotion activity in relation to sales of Securities constitutes an Offer of Securities.
      2. The exception in rule 2.2.1(2)(b) is of a temporary nature and will be in effect until the relevant collective Investment legislation is in force. The effect of this exception is that an Offer of a Unit by a Person who is an Authorised Firm is not subject to the Offered Securities Rules. However, an Offer of a Unit by an Authorised Firm is governed under other provisions of the DFSA Rulebook, in particular, the Rules in the Conduct of Business module. Conversely, the Offer of a Unit by a Person other than an Authorised Firm will be governed by the Offered Securities Rules.

      OSR 2.2.2

      An Offer is made in the DIFC if, at the time of the Offer, the Offeree is in the DIFC.

      OSR 2.2.3

      An Offer is made from the DIFC if, at the time of the Offer, the Offeror is in the DIFC.

      OSR 2.2.3 Guidance

      Cross border offers

      1. This Guidance is primarily intended for Persons located outside the DIFC who undertake cross-border offers. Many cross-border offers with a DIFC element will be caught by these Rules. It is important that Persons located outside the DIFC are aware of the scope and impact of the Rules applicable to them.
      2. Cross-border offers of Securities made to Persons in the DIFC fall within the Rules. Any Person who makes such an Offer is required to comply with the obligations of an Offeror under the Rules regardless of whether he is established in the DIFC or elsewhere.
      3. The scope of the regime applies without differentiating the media by which Offers take place. In the context of internet-based offerings, this means that an operator of a website on which Securities are Offered to Persons within the DIFC will be subject to these Rules, whether or not the operator is established in the DIFC.

      When is an Offer made in the DIFC?

      4. It will be a question of fact in each case whether a Person has in fact made an Offer. The DFSA considers that the following will be indications that an Offer (including via a website) has not in fact been made in the DIFC, however, these examples of indicators are not exhaustive, and satisfaction of them is not conclusive as to no Offer being made in the DIFC:
      a. an appropriate and prominent disclaimer (in the case of an internet Offer, either on the website or in any Offer documentation contained on the website) or a term in any subscription or a purchase term prohibiting the sale or issue of Securities to Persons in the DIFC or expressly identifying the jurisdictions in which the Offer is qualified to be made and no actual sales are made in the DIFC unless the sales are made in compliance with the Markets Law 2004 and these Rules; or
      b. systems and controls on the part of the Person offering the Securities to ensure that it, any Member of its Group, any entity controlled, sponsored or managed by it, or any entity with whom it has arrangements in relation to the Offer of the Securities does not sell or issue Securities to a Person in the DIFC.

      OSR 2.3 Prohibition on offers

      OSR 2.3 Guidance

      1. Article 13(1) of the Markets Law sets out the prohibition on offering Securities as follows:

      "A Person shall not make an Offer of Securities in or from the DIFC unless:
      a. the Offer of Securities is made by way of an Exempt Offer or Prospectus Offer in accordance with this Part and the Offered Securities Rules; and
      b. if an application for admission to the Register of Listed Securities has been made, the Offer of Securities is also made in accordance with Part 4 of this Law".
      2. Article 13(1)(a) refers to Exempt Offers and these are dealt with under section 2.4 and chapter 3 of this module.
      3. Article 13(1)(a) also refers to Prospectus Offers and these are dealt with under section 2.5 and chapter 4 of this module.
      5. Article 12 of the Markets Law 2004 provides as follows:

      The application of this Part 3 and any Offered Securities Rules made for the purpose of this Part is subject to any provision of a law or of any rules made for the purpose of that law which may govern the Offer of Securities which comprise Units or Shares in a collective Investment fund or any rights or interests in such Units or shares".

      OSR 2.4 Exempt offers

      OSR 2.4 Guidance

      1. Article 14(2) of the Markets Law defines an Exempt Offer as follows:

      Exempt Offers are offers of Securities:
      a. by recognised governments or other persons on the list of Exempt Offerors maintained by the DFSA in the Offered Securities Rules;
      b. made to and directed at Professional Investors;
      c. made in connection with a Takeover offer; or
      d. as may be prescribed by the Offered Securities Rules".
      2. "Professional Investors" is defined in the Markets Law as follows:

      persons whose ordinary activities involve them in acquiring, holding, managing or disposing of Investments and any other persons prescribed by the Offered Securities Rules".

      OSR 2.4.1

      (1) The DFSA, for the purposes of Article 14(2)(d) of the Markets Law, prescribes an Offer as an Exempt Offer if:
      (a) the Offer satisfies at least one of the following conditions:
      (i) the Securities are Commercial Paper, Certificates of Deposit or bills of exchange;
      (ii) the Offer is made to no more than twenty five Offerees in any twelve-month period;
      (iii) the total consideration payable for the Securities does not exceed one million dollars;
      (iv) the Securities are Debentures and the minimum consideration which may be paid by any Person for the Securities acquired by him pursuant to the Offer is at least fifty thousand dollars; or
      (v) the Securities are Units and are offered by an Authorised Firm; or
      (b) the Offer is of Securities that:
      (i) are Shares and are Offered by the Issuer to Members, creditors or Employees of the Issuer or their Relatives;
      (ii) are issued by a Body Corporate and Offered by the Body Corporate to a Member of the same Group as the Body Corporate;
      (iii) result from the conversion of a Convertible and a Prospectus relating to the Convertible has been published in the DIFC under these Rules; or
      (iv) the Securities are Shares, Certificates representing Shares, or Warrants to subscribe for Shares in a Body Corporate Offered by the Body Corporate in Exchange for Securities in the same Body Corporate and the Offer does not result in any increase in the issued share capital of that Body Corporate.
      (2) An Exempt Offer is a Personal Exempt Offer if it:
      (a) satisfies the conditions set out in Rules 2.4.1(1)(a)(ii) and (iii);
      (b) may only be accepted by the Person to whom it is made; and
      (c) is made to a Person who is likely to be interested in the Offer having regard to:
      (i) previous contact between the Person making the Offer and that Person;
      (ii) a professional or other connection between the Person making the Offer and that Person; or
      (iii) statements or actions by that Person that indicate that they are interested in offers of that kind.

      OSR 2.4.1 Guidance

      Those Offerors that make Offers which are exempt by virtue of Article 14(2)(a) or (b) of the Markets Law 2004 or rule 2.4.1(1)(a), other than Personal Exempt Offers are subject to the obligations set out in chapter 3 of this module. Those who make Personal Exempt Offers and Offers which are exempt by virtue of Article 14(2)(c) of the Markets Law 2004 or rule 2.4.1(1)(b) have no further obligations imposed upon them under these Rules.

      OSR 2.4.2

      An Offer remains an Exempt Offer if the Offer falls within one or more of the conditions under rule 2.4.1(1).

      OSR 2.4.2 Guidance

      1. The effect of rule 2.4.2 is that the conditions set out in rule 2.4.1(a) are cumulative. Hence, for example, an Offer may be made both to Qualified Investors who are Professional Investors and up to twenty five other Qualified Investors who are not Professional Investors without losing the benefit of exemption.
      2. The exemption allowing Exempt Offers to be made to up to twenty five Persons is viewed restrictively by the DFSA. This is because allowing marketing to be made widely, on terms that no more than twenty five Offers will be made, would give firms an easy means to market or promote the Securities to a large number of Persons without being subject to the disclosure regime associated with Prospectus Offers. This would not be in the interests of the DIFC.

      OSR 2.4.3

      An Offeror is an Exempt Offeror if that Offeror is included in the list of Exempt Offerors set out in App6.

      OSR 2.5 Prospectus offers

      OSR 2.5 Guidance

      1. Article 15(1) of the Markets Law states:

      No Offer of Securities, other than an Exempt Offer, may take place under this Part unless:
      a. a Prospectus has been filed with the DFSA and published; and
      b. the Offeror has appointed a Sponsor or underwriter or both, if required to do so by the DFSA."
      2. Article 15(2) of the Markets Law states:

      "A Prospectus shall comply with the Offered Securities Rules and contain all information as investors would reasonably require for the purpose of making an informed assessment of:
      a. the assets and liabilities, financial position, profits and losses, and prospects of the Offeror or Issuer or both in the circumstances prescribed in the Offered Securities Rules; and
      b. the nature of the Securities and the rights attached to those Securities".
      3. Chapters 4, 7 and 8 contain provisions relating to Prospectus Offers in addition to those set out in this section.

      OSR 2.5.1

      A Person intending to make a Prospectus Offer in relation to the Issue of Securities must be able to satisfy the DFSA before making the Offer that the Governing Body of the Undertaking whose Securities are to be offered:

      (a) is fulfilling or has systems and controls to enable it to comply with the requirements in relation to Corporate Governance and Director's Dealings set out in App5; and
      (b) has obtained all the necessary consents from the shareholders in accordance with App4.

      OSR 2.5.1 Guidance

      A Person will need to be able to produce information that readily enables the DFSA to be satisfied that the criteria set out in App4 and 5 have been fulfilled and will continue to be fulfilled.

      OSR 2.6 Offer documents from other jurisdictions

      OSR 2.6.1

      (1) Where the DFSA is satisfied that an Offer document produced under legislation in a jurisdiction other than the DIFC:
      (a) meets the standards prescribed in these Rules; and
      (b) is compatible with the requirements prescribed in these Rules
      the DFSA may accept such document as meeting the requirements of an Offer document under these Rules.
      (2) The DFSA may accept such document subject to conditions or restrictions imposed by the DFSA as it sees fit.
      (3) Where the Offer document referred to in (1) is not in the English language, it must be accompanied by an English translation.

      OSR 2.6.1 Guidance

      1. The DFSA considers it in the interests of the DIFC to accept Offer documents produced under the rules of other jurisdictions, provided that they meet the standards required by the DFSA.
      2. A Person considering filing an Offer document pursuant to rule 2.6.1 should approach the DFSA at the earliest possible time to discuss how to proceed.

      OSR 3 Exempt Offers of Securities

      OSR 3.1 Application

      OSR 3.1.1

      This chapter applies to a Person who makes or intends to make an Exempt Offer of Securities other than a Person who makes or intends to make a Personal Exempt Offer or an Offer of Securities which is exempt by virtue of Article 14(2)(c) of the Markets Law 2004 or rule 2.4.1(1)(b).

      OSR 3.1.1 Guidance

      1. Article 14(1) of the Markets Law states that a Person who makes an Exempt Offer shall comply with any requirements relating to that Exempt Offer which are prescribed by the Offered Securities Rules.
      2. The effect of this application provision is that chapter 3 will apply to all Exempt Offerors except for those that have made Personal Exempt Offers or Offers which are exempt by virtue of Article 14(2)(c) of the Markets Law or rule 2.4.1(1)(b). The DFSA has imposed no requirements in respect of those offers which are exempt by virtue of Article 14(2)(c) or rule 2.4.1(c).

      OSR 3.2 Exempt Offer statement

      OSR 3.2.1

      A Person making an Exempt Offer of Securities must ensure that he has provided each Offeree with an Exempt Offer Statement prior to the formation of any binding contract in respect of the Securities except where:

      (a) the Securities are Commercial Paper, Certificates of Deposit or bills of exchange;
      (b) the Securities are issued by an Exempt Offeror;
      (c) the Securities are Listed Securities including Securities which are the subject of an application for an admission to Listing; or
      (d) the Securities are Unlisted Securities and have been offered previously by way of a Prospectus Offer.

      OSR 3.2.1 Guidance

      Issuers of Commercial Paper and Certificates of Deposit are reminded to check that the issue does not breach the restriction in the Federal Law No.8 of 2004 and the Conduct of Business module in relation to Deposit taking.

      OSR 3.2.2

      (1) For the purposes of rule 3.2.1 an Exempt Offer Statement must contain at minimum the information set out in the table below:

      Table

      Information to be included in an exempt Offer statement

      a. The name of the Issuer and the address of its principal place of business and (if different) its registered office.
      b. If different to the Issuer, the name and address of the Offeror.
      c. The name and address of any professional advisors in relation to the Exempt Offer.
      d. The nature of and rights attached to the Securities.
      (2) An Exempt Offer Statement must also contain the following statement displayed prominently on its front page:

      "This statement relates to an Exempt Offer of Securities in accordance with the Offered Securities Rules of the DIFC Financial Services Authority.

      This statement is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other Person.

      The DIFC Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers of Securities. The DIFC Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it.

      The Securities to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Securities offered should conduct their own due diligence on the Securities.

      If you do not understand the contents of this document you should consult an authorised financial adviser."

      OSR 3.2.3

      A Person who makes an Exempt Offer which requires an Exempt Offer Statement must create and update the following records through the period of the Offer:

      (a) a copy of the Exempt Offer Statement relating to the Offer;
      (b) a list containing:
      (i) the name and address of each Offeree relating to the Offer;
      (ii) the date on which the Offer was made to each Offeree;
      (iii) the date on which an Exempt Offer Statement was supplied to each Offeree who purchases Securities, including the acknowledgement of a receipt by the Offeree who purchased the Securities;
      (iv) a description of the Securities (if any) issued to, or purchased by or sold to, the Offeree (including the number of Securities and consideration for them);
      (v) the grounds for belief that the Offeree was a Person to whom an Exempt Offer could be made in accordance with the Rules; and
      (vi) the condition under section 2.4 by reference to which the Offer to the Offeree is an Exempt Offer.

      OSR 3.2.3 Guidance

      Where an Offeree is not an individual, records made under rule 3.2.3 should include the name of at least one representative of the Offeree.

      OSR 3.3 Qualified Investor restriction

      OSR 3.3.1

      No Exempt Offer of Securities may be made in or from the DIFC to any Person unless the Offeror reasonably believes the Person to be a Qualified Investor.

      OSR 3.3.2

      A Qualified Investor is a Person who meets the following criteria:

      (a) an individual who:
      (i) has at least one million dollars in liquid assets and who has provided the Offeror or another Person on behalf of the Offeror with written confirmation of this fact;
      (ii) after analysis has sufficient financial experience and understanding to participate in financial markets in a wholesale jurisdiction; and
      (iii) has consented in writing to being treated as a Qualified Investor in a wholesale jurisdiction;
      (b) an Undertaking which has had, or any of whose Holding Companies or Subsidiaries has had, in the last two years, called up share capital or net assets of at least five million dollars, in the case of a limited liability Partnership calculated without deducting loans owing to any of the partners;
      (c) a trustee of a trust or pension scheme which has had in the last two years assets of at least five million dollars calculated by aggregating the value of the cash and Investments forming part of the trust's or scheme's assets, but before deducting its liabilities;
      (d) a properly constituted government, government agency, central Bank or other national monetary authority of any country or jurisdiction;
      (e) a public authority or State Investment body;
      (f) a supranational organisation whose Members are either countries, central Banks or national monetary authorities;
      (g) an Authorised Firm or Regulated Financial Institution;
      (h) an Authorised Market Institution, Recognised Body, regulated Exchange, regulated Clearing House or regulated settlement operator;
      (i) an Undertaking which is a Holding Company or Subsidiary of an Undertaking in (g) or (h) with that Undertaking's consent;
      (j) a Body Corporate whose Shares are listed or admitted to trading on any regulated Exchange of an IOSCO Member country; or
      (k) a Collective Investment Fund or Special Purpose Vehicle.

      OSR 3.3.3

      For the purpose of rule 3.3.2(a)(i), liquid assets are cash or assets which can be readily converted into cash, including but not limited to marketable Securities, government bonds, treasury bills and notes that mature within ninety days.

      OSR 3.3.4

      For the purpose of rule 3.3.2(a)(ii), an Offeror must ensure that the analysis includes consideration of each of the following matters:

      (a) the individual's knowledge and understanding of the relevant financial markets, types of Investment and of the risks involved either generally or in relation to the proposed transaction;
      (b) the length of time the individual has been active in relevant financial markets, the frequency of dealings and the extent to which the individual has relied on financial advice from financial institutions;
      (c) the size and nature of transactions that have been undertaken for the individual in relevant financial markets;
      (d) the individual's relevant qualifications relating to financial markets;
      (e) the composition and size of the individual's existing financial Investment portfolio; and
      (f) any other matters which the Offeror considers relevant.

      OSR 3.4 Record keeping

      OSR 3.4.1

      Records made under this chapter must be:

      (a) maintained for a period of six years from the end of the period of the Exempt Offer; and
      (b) be capable of prompt reproduction to the DFSA in English during business hours.

      OSR 4 Prospectus Offers of Securities

      OSR 4.1 Application

      OSR 4.1.1

      This section applies to a Person who makes or intends to make a Prospectus Offer of Securities.

      OSR 4.2 General requirements

      OSR 4.2.1

      (1) A Person must ensure prior to making an Offer of Securities by way of a Prospectus Offer that:
      (a) a Prospectus in the English language relating to the Securities containing the information specified in chapter 7 has been filed with the DFSA at least three business days previously;
      (b) the DFSA has not notified the Person proposing to make the Offer that he must not publish the filed Prospectus;
      (c) the filed Prospectus has been published;
      (d) there is a Reporting Entity in respect of the Securities to which the Prospectus relates;
      (e) subject to rule 4.2.1(2), the Securities are in existence at the time of filing the Prospectus or are to be issued pursuant to the Offer to which the Prospectus relates; and
      (f) if the Securities are Unlisted, the conditions in rule 4.3.1 are satisfied.
      (2) In the case of an Offer of a further Issue of Securities, the requirement in 1(f) does not apply where:
      (a) the type or Class of Listed Securities is already in existence and the further issue, in any one twelve month period, does not exceed twenty per cent of the number of the Securities of that type or Class which are already Listed; or
      (b) the further issue of Listed Securities is allotted by way of a bonus or capitalisation issue to existing holders in proportion to their existing holdings out of the Issuer's reserves or profits without payment to the Issuer by the existing holders; and
      (c) an application for the Listing of the Securities in (a) or (b) has been made in accordance with chapter 5.

      OSR 4.2.1 Guidance

      1. The effect of rule 4.2.1(a) is that an Offeror must file its Prospectus with the DFSA at least three business days before making its Offer. This will provide the DFSA with an opportunity to consider the basic content requirements and to determine whether it is necessary to have a Sponsor or underwriter appointed. It should not be assumed that because of this three day period the DFSA will not use other powers available to it to issue a stop order in circumstances where the need for such further action is subsequently identified.
      2. The DFSA would regard a Prospectus as published where it has been made available on the Issuer's website or has been made available by other such means as the DFSA requires in accordance with rule 9.2.1(3).
      3. In accordance with Part 3 of the Markets Law 2004, a Person who files a Prospectus becomes a Reporting Entity unless he falls within one of the exclusions to Reporting Entity status under paragraph (2) of the definition of that term.
      4. An Offeror of Securities who is not also the Issuer of the Securities will not in general be in a position to satisfy the disclosure requirements associated with a Prospectus Offer, or with those associated with Reporting Entity status in relation to the Securities.
      5. An Offeror who is not the Issuer would also need a waiver or modification of the Rules with which it cannot comply by virtue of it not being the Issuer. The DFSA will not generally grant such a waiver or modification to allow for a Prospectus Offer except in exceptional circumstances.
      6. In the case of Certificates, the Issuer of the underlying Securities to which the Certificates relate (and not the custodian or depositary which issues the Certificates) is the Issuer.
      7. Further Offers of Securities after the date of the Prospectus will need to satisfy the requirements of rule 4.2.1 in respect of that Offer subject to the limited exemptions in respect of Listed Securities contained in section 4.4.

      OSR 4.2.2

      A Person may only Offer Securities by way of a Prospectus Offer for a period of twelve months from the date of filing the Prospectus relating to the Securities.

      OSR 4.2.3

      (1) An Offeror must not, and must ensure that its Associates do not, during the Offer period issue a financial promotion relating to a Prospectus Offer unless it states that a Prospectus has been published or is to be published, and gives an address.
      (2) In (1) a financial promotion is an advertisement or any other form of promotion or marketing inviting a Person to:
      (a) enter into an agreement;
      (b) Offer to enter into an agreement; or
      (c) exercise any rights conferred by a Security;
      to acquire, dispose of, underwrite or convert a Security.
      (3) In (2) the financial promotion may be communicated in any manner including, but not limited to, the following:
      (a) orally;
      (b) electronically; or
      (c) in writing.
      (4) For the purposes of (2) and (3) where a Body Corporate:
      (a) has Securities which are Listed; or
      (b) has Securities which are Unlisted but a Prospectus has been filed in relation to those Securities
      and it issues information as a Reporting Entity in accordance with the requirements of OSR, disclosure of such information is not a financial promotion provided the disclosure of the information does not:
      (c) include an express invitation or offer; or
      (d) contain information calculated to encourage or lead a Person,
      to engage in any of the activities specified in (2) (a), (b) or (c).

      OSR 4.2.4

      Where an Offeror has filed a Prospectus and the Offeror does not proceed with the Offer in accordance with the terms and conditions of the Prospectus he must not, and must ensure that his Associates do not, Offer any Securities to which the Prospectus relates, until twelve months have elapsed since the date of the filing of the Prospectus, unless:

      (a) the DFSA consents in writing; or
      (b) the Offeror files a new or supplementary Prospectus in respect of the Offer of Securities.

      OSR 4.2.4 Guidance

      The DFSA may consent to an Offer of Securities in the circumstances described in rule 4.2.4 where, for example, an Offeror decides not to proceed with a Prospectus Offer in good faith by reason of market volatility, lack of investor demand or other similar circumstances.

      OSR 4.2.5

      The DFSA may require that a Prospectus Offer of Securities be underwritten by an underwriter acceptable to the DFSA.

      OSR 4.2.6

      The DFSA may require an Offeror to appoint a Sponsor to perform the functions specified in chapter 11.

      OSR 4.2.6 Guidance

      In determining whether to require an Offeror to appoint a Sponsor in relation to a Prospectus Offer, the DFSA will consider all of the surrounding facts and circumstances of the matter, including, but not limited to, the following:

      a. the level of experience and expertise of the management and Directors of the Issuer concerning the Offer of Securities;
      b. whether an underwriter has been appointed to the Offer;
      c. the nature and type of Securities;
      d. whether the Offeror has previously filed a Prospectus in this jurisdiction or another jurisdiction; and
      e. the jurisdiction of the Offeror.

      OSR 4.2.7

      The DFSA may, as a condition of registering a Prospectus, impose escrow requirements on certain Classes of Persons for a period not exceeding twelve months after a Prospectus Offer of Securities has been made.

      OSR 4.2.8

      An Offeror must ensure that:

      (a) an application form for the sale or issue of Securities the subject of a Prospectus Offer, is not provided to any Person unless it is included in or accompanied by the relevant Prospectus; and
      (b) only applications in the form contained in the Prospectus are accepted.

      OSR 4.3 Conditions in relation to unlisted securities

      OSR 4.3.1

      For the purposes of rule 4.2.1(1)(f) the conditions are:

      (a) the Issuer has not issued any Unlisted Securities under a Prospectus in the preceding twelve months;
      (b) the Issuer has (together with any Group members) net tangible assets exceeding five million dollars; and
      (c) the total maximum consideration payable in respect of the Securities to be Offered under the Prospectus does not exceed two million dollars.

      OSR 5 Listing Applications

      OSR 5.1 Application

      OSR 5.1.1

      This chapter applies to a Person who makes or intends to make an application for Listing.

      OSR 5.2 Conditions for listing

      OSR 5.2.1

      (1) In order for Securities to be considered by the DFSA for Listing, the following conditions must be satisfied:
      (a) the Issuer of the Securities must fulfil any relevant eligibility conditions set out in part 1 of App1;
      (b) the Securities must fulfil any relevant eligibility conditions set out in part 2 of App1;
      (c) if the Securities are listed on an Exchange situated outside the DIFC, prior approval for the Listing of the Securities from the relevant Exchange or Financial Services Regulator must have been obtained if prior approval is required; and
      (d) no legal or regulatory restriction on the Issuer or the Securities prevents the Listing.
      (2) An application for admission of Securities to Listing must be made by the Issuer.
      (3) Securities that are Units will not be considered for Listing.

      OSR 5.2.1 Guidance

      In some cases it may be necessary to obtain prior approval of an Exchange or regulator before listing e.g. UAE companies will need to obtain permission from the UAE Securities and Commodities Authority.

      OSR 5.2.2

      The DFSA may require an Issuer of Securities which are the subject of a Listing application to appoint a Sponsor to perform the functions specified in chapter 11.

      OSR 5.2.2 Guidance

      1. In determining whether to require an Applicant for Listing to appoint a Sponsor, the DFSA will consider all of the surrounding facts and circumstances of the matter, including, but not limited to, the following:
      a. the level of experience and expertise of the management and Directors of the Applicant for Listing in respect of Listing Securities;
      b. whether an underwriter has been appointed;
      c. the nature and type of Securities;
      d. whether there has been a primary listing on a Recognised Exchange or other exchange;
      e. whether the Reporting Entity has previously listed on the Exchange; and
      f. the jurisdiction of the Issuer or Offeror.
      2. The exception for consideration for Listing Units in rule 5.2.1(3) is of a temporary nature and will be in effect until the legislation in respect of collective investment funds is in force. The conditions for Listing funds will be updated at that time.

      OSR 5.3 Applications for listing

      OSR 5.3.1

      (1) The Issuer must complete and submit the appropriate form in PFN and include a Prospectus and any other such documents as may be prescribed by the DFSA in the application form.
      (2) The application must be in English and all accompanying documents must be in the English language or, where the original document is not in English, accompanied by an English translation and must be submitted to the DFSA in reasonable time for the DFSA to review them and for amendments to be made to them.

      OSR 5.3.1 Guidance

      1. An Issuer submitting an application under this chapter is required to pay the appropriate Fee as required under chapter 13.
      2. New applicants for Listing are encouraged to contact the DFSA in advance of making an application in order to discuss the process of becoming Listed.
      3. The DFSA will endeavour to process all applications within thirty days of submission of all the information and supporting documentation required under these Rules.

      OSR 5.3.2

      An application for Listing of Securities, where the Securities to be listed fulfil the requirements of rule 4.2.1(2), must be made at least three business days prior to the issue of such Securities.

      OSR 5.4 Admission to listing

      OSR 5.4.1

      The DFSA may grant an admission to Listing subject to conditions or restrictions.

      OSR 5.4.2

      The DFSA is entitled to require the publication of further information by, and to impose additional continuing obligations on, any applicant where it considers it appropriate.

      OSR 5.5 Publication of prospectus

      OSR 5.5.1

      Where the DFSA has granted admission to Listing, the Issuer of the Securities must, if a Prospectus has not already been published, publish the Prospectus without undue delay.

      OSR 5.5.1 Guidance

      The DFSA would regard a Prospectus as published where it has been made available on the Issuer's website or has been made available by other such means as the DFSA requires in accordance with rule 9.2.1(3).

      OSR 5.6 Ongoing conditions for listing

      OSR 5.6.1

      As an ongoing condition for Listing:

      (a) the Issuer must continue to fulfil the relevant eligibility conditions set out in part 1 of App1;
      (b) the Listed Securities must continue to fulfil the relevant eligibility conditions set out in part 2 of App1;
      (c) the Issuer must comply with its obligations as a Reporting Entity in accordance with chapter 9; and
      (d) the Issuer must comply with any conditions or restrictions imposed by the DFSA under section 5.4.

      OSR 5.7 Decision-making process

      OSR 5.7.1

      In considering an application for Listing, the DFSA may:

      (a) carry out any enquiries which it considers appropriate;
      (b) require the applicant to provide additional information in such form as the DFSA considers appropriate;
      (c) require any information furnished by the applicant to be verified in such manner as the DFSA may specify; or
      (d) take into account any information which it considers appropriate in relation to the application.

      OSR 5.7.2

      Where the DFSA requires additional information or verification under 5.7.1, the application will be deemed withdrawn if the applicant does not provide the information, or obtain the verification requested, as the case may be, within twenty days, unless otherwise agreed by the DFSA.

      OSR 5.8 Right to make representations

      OSR 5.8.1

      If the DFSA is minded to refuse an application for Listing it will notify the applicant in writing.

      OSR 5.8.2

      A notification under 5.8.1 will set out:

      (a) grounds for the DFSA's intention to refuse the application; and
      (b) details of the applicant's right to make representations in relation to the intended refusal.

      OSR 5.8.2 Guidance

      In accordance with Article 18 of the Markets Law, the DFSA may refuse an application if, for a reason relating to the applicant or to the Securities, it considers that:

      a. granting the applicant or the Securities admission to the Register of Listed Securities would be detrimental to the interests of persons using the DIFC to invest or contemplating using the DIFC to invest;
      b. the requirements of these Rules have not been complied with;
      c. any requirement imposed by the DFSA has not been complied with;
      d. the Person or applicant has failed to comply with any obligations to which he is or was subject to as a result of having a listed Security in another jurisdiction; or
      e. a refusal is in the interests of the DIFC.

      OSR 5.8.3

      Within twenty days of service of a notification under rule 5.8.1, the applicant may make representations to the DFSA in relation to any of the grounds set out in the notification.

      OSR 5.8.3 Guidance

      1. When making a representation the procedure in ENF App3 should be followed.
      2. The DFSA will take any representations into account before issuing a decision.
      3. The DFSA will generally issue a decision within thirty days of receiving representations under this section.

      OSR 5.9 Determination of application and notification of decisions

      OSR 5.9.1

      The DFSA may:

      (a) grant an application for Listing;
      (b) grant an application, subject to such conditions or restrictions as it considers appropriate; or
      (c) refuse an application.

      OSR 5.9.1 Guidance

      In circumstances where the DFSA is minded to grant an application subject to conditions or restrictions, it will normally notify the applicant in advance and will be prepared to discuss the conditions or restrictions with the applicant.

      OSR 5.9.2

      If the DFSA refuses an application, or grants it subject to conditions or restrictions, it will give the applicant written notification of the decision without undue delay.

      OSR 5.9.3

      A notification under rule 5.9.2 will include the grounds for the decision.

      OSR 5.9.4

      The Regulatory Appeals Committee has jurisdiction to hear and determine any appeal in relation to a decision to refuse a Listing application or to grant a Listing application subject to conditions or restrictions.

      OSR 5.10 Listing documents from other jurisdictions

      OSR 5.10.1

      (1) Where the DFSA is satisfied that an application for Listing produced under legislation in a jurisdiction other than the DIFC:
      (a) meets the standards prescribed in these Rules; and
      (b) is compatible with the requirements prescribed in these Rules
      the DFSA may accept such document as meeting the requirements of an application for Listing under these Rules.
      (2) The DFSA may accept such document subject to conditions or restrictions imposed by the DFSA as it sees fit.
      (3) Where the application for Listing referred to in (1) is not in the English language, it must be accompanied by an English translation.

      OSR 5.10.1 Guidance

      1. The DFSA considers it in the interests of the DIFC to accept applications for Listing produced under the rules of other jurisdictions, provided that they meet the standards required by the DFSA.
      2. A Person considering filing an application for Listing pursuant to rule 5.10.1 should approach the DFSA at the earliest possible time to discuss how to proceed.

      OSR 6 Listed Securities

      OSR 6.1 Application

      OSR 6.1.1

      This chapter applies to a Reporting Entity whose Securities are Listed.

      OSR 6.2 Powers of the DFSA in relation to listed securities

      OSR 6.2.1

      The DFSA may suspend or delist Securities from the Register of Listed Securities with immediate effect or from such date and time as may be specified if it is satisfied that:

      (a) there are special circumstances which preclude regular dealings in the Securities;
      (b) the ongoing conditions for Listing under rule 5.6.1 have not been fulfilled;
      (c) the Reporting Entity has failed to comply with any provision of the Markets Law 2004 or any rule in chapter 9;
      (d) the Reporting Entity has fulfilled the requirements in Rules 6.5.1 or 6.6.1; or
      (e) delisting or suspension would be in the interests of the DIFC.

      OSR 6.2.2

      (1) Upon making a decision in relation to a suspending or delisting of Securities the DFSA will, without undue delay, notify the Reporting Entity of the Securities in writing of its decision.
      (2) The DFSA will provide reasons for its decision upon request by the Reporting Entity.

      OSR 6.2.3

      (1) The DFSA will make a public disclosure of a suspension or delisting.
      (2) The DFSA will disclose the suspension or delisting to the public by such means as the DFSA may consider appropriate.

      OSR 6.2.4

      The Regulatory Appeals Committee has jurisdiction to hear and determine any appeal in relation to a decision to suspend or delist Securities made under section 6.2.

      OSR 6.3 Delistings and non-urgent suspensions

      OSR 6.3.1

      Unless rule 6.4.1 applies, if the DFSA is minded to suspend or delist Securities, it will notify the Reporting Entity in writing in advance of such suspension or delisting.

      OSR 6.3.2

      A notification under 6.3.1 will set out:

      (a) grounds for the DFSA's intention to suspend or delist the Securities; and
      (b) details of the Reporting Entity's right to make representations in relation to the proposed suspension or delisting.

      OSR 6.3.3

      (1) Within the time period specified in the notification, the Reporting Entity may make representations to the DFSA in relation to any of the grounds set out in the notification.
      (2) The time period will be determined by the DFSA at its sole discretion.

      OSR 6.3.3 Guidance

      When making a representation the procedure in ENF App3 should be followed.

      OSR 6.3.4

      The DFSA will notify the Reporting Entity of its decision within thirty days of receiving representations under this section.

      OSR 6.4 Urgent suspensions

      OSR 6.4.1

      This section applies where the DFSA concludes that any delay likely to arise as a result of allowing a Reporting Entity to make representations before suspending the Securities would be prejudicial to the interests of the DIFC.

      OSR 6.4.2

      Where the DFSA has suspended Securities from the Register of Listed Securities without providing a prior opportunity to make representations, the DFSA will:

      (a) provide the Reporting Entity with an opportunity to make representations in Person and in writing to the DFSA within the period of fourteen days, or such further period as may be agreed, from the date on which such suspension, or both, was notified; and
      (b) provide a response to any such submission, and make any consequential direction, variation or withdrawal of the notification, without undue delay.

      OSR 6.4.2 Guidance

      When making a representation the procedure in ENF App3 should be followed.

      OSR 6.5 Voluntary suspension

      OSR 6.5.1

      (1) A Reporting Entity may apply to the DFSA to have its Securities suspended from the register of Listed Securities if it believes that there are special circumstances which preclude regular dealings in the Securities.
      (2) An application under (1) must include grounds for the request for the suspension, the duration of the requested suspension, and the nature of the events affecting the Reporting Entity.
      (3) The Reporting Entity must announce the suspension.

      OSR 6.6 Voluntary delisting

      OSR 6.6.1

      A Reporting Entity may voluntarily delist its Securities from the Register of Listed Securities only if it gives the DFSA at least 90 days' advance written notice and if:

      (a) it has or will have at the time of delisting an alternative listing on another Exchange acceptable to the DFSA; or
      (b) where the Securities are the only Securities Listed by the Reporting Entity, it has or will have at the time of delisting secured its removal from Reporting Entity status in accordance with the Markets Law 2004.

      OSR 6.7 Obligations of reporting entities in relation to suspended securities

      OSR 6.7.1

      A Reporting Entity whose Securities are suspended must continue to comply with the Rules applicable to it in respect of these Securities.

      OSR 7 Prospectus Requirements

      OSR 7.1 Application

      OSR 7.1.1

      (1) Sections 7.1 to 7.5 apply to:
      (a) an Offeror who is required under chapter 4 to file a Prospectus with the DFSA; and
      (b) an Issuer who is required under chapter 5 to file a Prospectus with the DFSA.
      (2) Sections 7.1 and 7.6 apply to a Reporting Entity.
      (3) Sections 7.1 and 7.7 apply to a Person who has made an application for Listing.

      OSR 7.2 Contents requirements

      1. Article 15(2) of the Markets Law requires that a Prospectus contain:

      "all information as investors would reasonably require for the purpose of making an informed assessment of:
      (a) the assets and liabilities, financial position, profits and losses, and prospects of the Offeror or Issuer or both in the circumstances prescribed in the Offered Securities Rules; and
      (b) the nature of the Securities and the rights attached to those Securities".
      2. The DFSA does not approve Prospectuses. It is for the Person who files the Prospectus (and the Issuer, where different) to ensure that the Prospectus complies with the requirements of this chapter.

      OSR 7.2.1

      An Issuer or Offeror who files a Prospectus must ensure that the Prospectus complies with:

      (a) Article 15(2) of the Markets Law 2004; and
      (b) the requirements specified in this chapter.

      OSR 7.2.2

      (1) An Issuer or Offeror must ensure that the Prospectus contains:
      (a) a summary of the Prospectus at or near the beginning of the document setting out:
      (i) the identity of the Issuer or Offeror;
      (ii) the nature of the Securities and the rights attached to those Securities;
      (iii) the nature of the risks involved in investing in the Securities; and
      (iv) details of all amounts payable in respect of the Securities; and
      (b) the relevant information specified in App2.
      (2) The version of the Prospectus submitted to the DFSA must be marked to indicate where the information required by the applicable paragraphs of App2 has been included. Where subsequent drafts or versions of the Prospectus are submitted, they must be marked to show changes from the previous version submitted.

      OSR 7.2.2 Guidance

      1. An Issuer or Offeror intending to file a Prospectus may apply for a waiver or modification in respect of the relevant requirements by written application to the DFSA where:
      a. the information required by App2 is not available or the Issuer or Offeror, after having exercised reasonable diligence, is unable to obtain the information;
      b. subject to Article 15(2) of the Markets Law 2004, disclosure of the information required by App2 would be unduly detrimental in the circumstances; or
      c. in the opinion of the Issuer or Offeror, the information is insignificant
      In (c), "insignificant" means not significant for the purpose of making an informed assessment under Article 15(2) of the Markets Law 2004.
      2. An Offeror of Securities who is not the Issuer of the Securities will not in general be in a position to satisfy the Prospectus disclosure requirements in relation to the Securities. Accordingly, the Offeror will need to apply for waiver or modification of the Rules with which it cannot comply by virtue of its not being the Issuer.
      3. The DFSA will not generally permit a waiver or modification of its Rules to allow for a Prospectus Offer in such a situation except in exceptional circumstances. In considering any application, the DFSA will not grant a waiver or modification where the resulting Prospectus would not contain full, true and plain disclosure of Material Information that would be reasonably required for the purpose of making an informed Investment decision.
      4. An Issuer or Offeror applying for a waiver or modification in respect of Prospectus requirements is required, in accordance with chapter 14, to complete and submit the appropriate form in PFN and:
      a. identify the contents requirement which it seeks to waive or modify; and
      b. provide a statement of the reasons why it believes the information should not or cannot be disclosed in the Prospectus, or should be disclosed in a modified manner.

      OSR 7.3 General requirements

      OSR 7.3.1

      An Issuer or Offeror filing a Prospectus must ensure that it is presented in a comprehensible form which may be easily analysed.

      OSR 7.3.1 Guidance

      It is important that information be presented as clearly as possible. At a minimum, information should be set out in a logical manner and, if also filed electronically, in a format which allows text searching.

      OSR 7.4 Structure requirements

      OSR 7.4.1

      Subject to section 7.5, an Issuer or Offeror may produce a Prospectus structured as:

      (a) a single document; or
      (b) two documents comprising:
      (i) a Registration Statement; and
      (ii) an Issue Note.

      OSR 7.4.2

      Where an Issuer or Offeror has produced a Prospectus comprising two documents it must ensure that:

      (a) the Registration Statement contains all relevant information relating to the Issuer set out in part 1 of App2; and
      (b) the Issue Note contains all relevant information relating to the Securities as set out in part 2 of App2.

      OSR 7.4.3

      A Registration Statement may form part of a Prospectus in respect of more than one Prospectus Offer, or application for Listing, provided that:

      (a) the Registration Statement includes the most recent set of audited accounts available in respect of the Issuer;
      (b) those accounts relate to a period ending not more than 12 months prior to the relevant Offer; and
      (c) since the date of the Registration Statement, the Reporting Entity filing the Prospectus has complied with its continuing disclosure obligations under chapter 9 relating to the Category of Securities to which the Prospectus relates.

      OSR 7.4.4

      (1) An Issuer or Offeror may produce a single Registration Statement covering more than one Category of Security.
      (2) A Registration Statement produced in this way may be used to List or make Prospectus Offers of any Category of Security, provided that the Registration Statement makes all the required disclosures relating to that Category.

      OSR 7.4.5

      Where an Issuer or Offeror has made a Prospectus Offer or application for Listing using a Registration Statement, an Issue Note must be produced relating to each subsequent Offer or application for Listing for the Prospectus to cover that Offer or issue.

      OSR 7.4.6

      Where a Prospectus contains a Registration Statement produced prior to the date of the Issue Note, an Issuer or Offeror must ensure that the Issue Note:

      (a) states the date of preparation of the Registration Statement; and
      (b) updates any disclosure in the Registration Statement to the extent necessary in order to comply with these Rules by setting out on the front page of the issue note:
      (i) the Internet address at which any subsequent disclosure is available; and
      (ii) an address at which the full text of any such disclosures are made freely available.

      OSR 7.5 Incorporation by reference

      OSR 7.5.1

      (1) Where a requirement under the Rules in this chapter requires disclosure of information in a Prospectus, an Issuer or Offeror filing the Prospectus may incorporate that information by reference to another source of information, provided that:
      (a) the source of information is publicly available on a continuing basis;
      (b) the information is clearly set out and easily accessible in that source;
      (c) the information is in English; and
      (d) the information may be accessed without Charge.
      (2) A reference must also contain sufficient information to allow a recipient of the Prospectus to decide whether to obtain the information or any part of it.

      OSR 7.5.2

      An Issuer or Offeror responsible for filing the Prospectus must provide a copy of any information incorporated by reference under this section free of Charge to any Person who requests it during the period in which applications may be made for the Securities under the terms of the Prospectus.

      OSR 7.6 Notification of significant changes during the Offer period

      OSR 7.6.1

      (1) A Reporting Entity must, if before the Offer period for the Securities to which the Prospectus relates closes:
      (a) there is a significant change affecting any matter disclosed in the Prospectus;
      (b) a significant new matter arises; or
      (c) there is a significant inaccuracy in the Prospectus,
      produce a Supplementary Prospectus, file it with the DFSA and make it available to each Offeree free of Charge until the end of the period during which the Offer remains open.
      (2) If the Prospectus comprises a Registration Statement and Issue Note, then the Supplementary Prospectus must consist of an updated Issue Note.
      (3) For the purpose of (1), "significant" means significant for the purpose of making an informed assessment of the matters mentioned in Article 15(2) of the Markets Law 2004.

      OSR 7.6.2

      If rule 7.6.1 applies then any reference in these Rules to a Prospectus must be read as including reference to a Prospectus as amended by a Supplementary Prospectus unless the context otherwise requires.

      OSR 7.6.3

      A Reporting Entity must ensure that a Supplementary Prospectus:

      (a) is made available in the same media and through the same channels as the original Prospectus; and
      (b) is provided without undue delay to each Person who has subscribed for or offered to purchase the Securities.

      OSR 7.6.4

      When a Supplementary Prospectus has been filed by a Reporting Entity and made available in accordance with rule 7.6.3, the Reporting Entity must:

      (a) inform Offerees of their right to confirm or retract any subscription or Offer made on the basis of the original Prospectus and the manner in which to do so; and
      (b) allow the Offeree a reasonable time in which to retract or confirm its subscription or Offer.

      OSR 7.6.4 Guidance

      What is a reasonable time for this purpose will depend on the circumstances, but in the usual course (absent time pressure due to compliance with listing or Takeover timetables) a minimum of seven days should be given.

      OSR 7.7 Notification of significant changes during the application for listing

      OSR 7.7.1

      (1) A Person who has made an application for Listing must produce a Supplementary Prospectus and file it with the DFSA if, before the Listing is granted:
      (a) there is a significant change affecting any matter disclosed in the Prospectus or any other document submitted to the DFSA;
      (b) a significant new matter arises; or
      (c) there is a significant inaccuracy in the Prospectus or any other document submitted to the DFSA.
      (2) If the Prospectus comprised a Registration Statement and an Issue Note, then the Supplementary Prospectus must consist of an updated Issue Note.

      OSR 7.7.2

      If rule 7.7.1 applies then any references in these Rules to a Prospectus must be read as including reference to a Prospectus as amended by a Supplementary Prospectus unless the context otherwise requires.

      OSR 8 Responsibility For Prospectuses

      OSR 8.1 Application

      OSR 8.1.1

      This chapter applies to any Person specified under rule 8.2.1 as being responsible for a Prospectus.

      OSR 8.2 Responsibility for prospectus

      OSR 8.2.1

      (1) The following Persons are responsible jointly and severally for a Prospectus:
      (a) the Person who filed the Prospectus or who makes an application for Listing in accordance with chapter 5;
      (b) where the Person is a Body Corporate, each Person who is a Director of that Body Corporate at the time when the Prospectus is filed;
      (c) where the Person is a Body Corporate, each Person who is authorised to be named, and is named, in the Prospectus as a Director or as having agreed to become a Director of that body either immediately or at a future time;
      (d) each Person who accepts, and is stated in the Prospectus as accepting responsibility for, or for any part of, the Prospectus;
      (e) each Person who is deemed to accept responsibility for any part of a Prospectus under these Rules; and
      (f) each Person not falling within any of the foregoing paragraphs who has authorised the contents of, or of any part of, the Prospectus.
      (2) A Person who has accepted responsibility for, or authorised, only part of the contents of any Prospectus, is responsible only for that part and only if it is included in (or substantially in) the form and context to which he has agreed.
      (3) Nothing in (1) makes a Person responsible for any part of a Prospectus by reason only of giving advice as to its contents in a professional capacity to a Person specified in (a)-(f) of (1).

      OSR 8.3 Liability for prospectuses

      OSR 8.3.1

      (1) Subject to rule 8.3.2:
      (a) the Person or Persons responsible for a Prospectus are liable to pay compensation to any Person who has acquired the Securities to which the Prospectus relates and suffered loss in respect of them as a result of any untrue or misleading statement in the Prospectus or the omission from it of any matter required to be included by these Rules; and
      (b) a Person who fails to comply with a requirement to produce and disseminate a Supplementary Prospectus is liable to pay compensation to any Person who has acquired any of the Securities in question and suffered loss in respect of them as a result of the failure.
      (2) References in this rule to the acquisition by any Person of Securities include references to his contracting to acquire them or an interest in them.

      OSR 8.3.1 Guidance

      An application for compensation under section 8.3 should be made to the Court.

      OSR 8.3.2

      (1) A Person, with the exception of the Issuer, will not incur any liability under rule 8.3.1 for any loss in respect of Securities caused by any such statement or omission if, at the time when the Prospectus was filed for registration he believed on reasonable grounds, having made such enquiries (if any) as were reasonable, that the statement was true and not misleading or that the matter whose omission caused the loss was properly omitted and:
      (a) he continued in that belief until the time when the Securities were acquired;
      (b) they were acquired before it was reasonably practicable to bring a correction to the attention of Persons likely to acquire the Securities in question;
      (c) before the Securities were acquired he had taken all such steps as it was reasonable for him to have taken to secure that a correction was promptly brought to the attention of Persons likely to acquire the Securities in question; or
      (d) the Securities were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused.
      (2) A Person will not incur any liability under rule 8.3.1(1)(a) for any loss in respect of Securities caused by a statement purporting to be made by or on the authority of another Person as an Expert which is, and is stated to be, included in the Prospectus with that other Person's consent at the time when the Prospectus was filed for registration, if he believed on reasonable grounds that the other Person was competent to make or authorise the statement and had consented to its inclusion in the form and context in which it was included and:
      (a) he continued in that belief until the time when the Securities were acquired;
      (b) they were acquired before it was reasonably practicable to bring the fact that the Expert was not competent or had not consented to the attention of Persons likely to acquire the Securities in question;
      (c) before the Securities were acquired he had taken all such steps as it was reasonable for him to have taken to secure that that fact was promptly brought to the attention of Persons likely to acquire the Securities in question; or
      (d) the Securities were acquired after such a lapse of time that, in the circumstances, he ought reasonably to be excused.
      (3) Without prejudice to (1) and (2), a Person will not incur any liability under rule 8.3.1(1)(a) for any loss in respect of any Securities caused by any such statement or omission as is there mentioned if:
      (a) before the Securities were acquired a correction or, where the statement was such as is mentioned in (2), the fact that the Expert was not competent or had not consented had been published in a manner calculated to bring it to the attention of Persons likely to acquire the Securities in question; or
      (b) he took all such steps as it was reasonable for him to take to secure such publication and believed on reasonable grounds that such publication had taken place before the Securities were acquired.
      (4) A Person will not incur any liability under rule 8.3.1(1)(a) for any loss resulting from a statement made by an official Person or contained in a public official document which is included in the Prospectus if the statement is accurately and fairly reproduced.
      (5) A Person will not incur any liability under rule 8.3.1 if the Person suffering the loss acquired the Securities in question with knowledge:
      (a) that the statement was false or misleading;
      (b) of the omitted matter or of the change; or
      (c) of the new matter or inaccuracy.
      (6) A Person will not incur any liability under rule 8.3.1(1)(b) if he believed on reasonable grounds that the change, new matter or inaccuracy in question was not such as to call for a Supplementary Prospectus.

      OSR 8.3.3

      An Expert is deemed to accept responsibility for any statement or report reproduced (in whole or in part) in a Prospectus with his consent.

      OSR 8.3.4

      A Person responsible for filing a Prospectus must ensure he keeps a record of any consent received under rule 8.3.3.

      OSR 8.3.5

      Rule 8.3.3 does not relieve an Expert from liability purely by virtue of his not having formally granted consent to reproduction of a report in a Prospectus.

      OSR 8.3.5 Guidance

      In order for an Expert to avoid liability, the DFSA expects that an Expert whose report has been included in a Prospectus without his consent to such an inclusion to notify the DFSA and the Issuer of the Securities of that fact.

      OSR 9 Obligations of Reporting Entities

      OSR 9.1 Application

      OSR 9.1.1 Application

      This chapter applies to a Reporting Entity.

      OSR 9.1.1 Guidance

      1. The term Reporting Entity is defined in the Schedule to the Markets Law as follows:
      "(1) Subject to (2), a Person is a Reporting Entity if:
      (a) the Person has or had Securities admitted to the Register of Listed Securities at any time;
      (b) the Person has filed a Prospectus with the DFSA under Article 15;
      (c) the Person merges with or acquires a Reporting Entity; or
      (d) the Person is declared in writing to be a Reporting Entity by the DFSA.
      (2) A Person is not a Reporting Entity if:
      (a) the Person is a properly constituted government, a government agency, a central Bank or other type of national monetary authority of a country or jurisdiction, a supra-national organisation whose Members are either countries, central Banks or national monetary authorities, a public authority or a State Investment body; or
      (b)
      (i) the Person previously had Securities admitted to the Register of Listed Securities;
      (ii) the Person currently has no Securities admitted to the Register of Listed Securities; and
      (iii) the current holders of at least seventy five per cent of Securities in the Reporting Entity have agreed in writing that the Person is no longer a Reporting Entity; or
      (c) the DFSA so determines."
      2. For the purpose of the exclusion from Reporting Entity status set out in paragraph (2)(b) of the definition, a Person who ceases to be a Reporting Entity by virtue of an agreement of holders of the Securities should notify the DFSA of that fact in order no longer to be treated as a Reporting Entity.

      OSR 9.2 Continuous disclosure

      OSR 9.2.1

      (1) A Reporting Entity must make timely disclosure of the relevant matters set out in part 1 of App3 in accordance with this chapter.
      (2) A Reporting Entity must ensure that its disclosure is complete, true, plain and not misleading, false or deceptive.
      (3) The Reporting Entity must, subject to section 9.3, disclose any matters as soon as reasonably practicable:
      (i) where part 1 of App3 requires public disclosure, by way of an announcement made on the Internet address of the Reporting Entity and by such other means as the DFSA may prescribe; or
      (ii) otherwise, as required by part 1 of App3.

      OSR 9.2.2

      If a Reporting Entity fails to comply with an obligation to disclose any information under this chapter, the DFSA may:

      (a) require the Reporting Entity to disclose the information; or
      (b) take such other steps as it considers appropriate;
      if it considers that to do so would be in the interests of the DIFC.

      OSR 9.2.2 Guidance

      1. Under Article 22 of the Markets Law 2004, a Reporting Entity must make disclosures to the market in the circumstances prescribed by the Offered Securities Rules. This chapter, together with part 1 of App3, sets out the obligations of Reporting Entities to make disclosures and provides Guidance in relation to Price Sensitive Information.
      2. Where a Reporting Entity realises that it has or may have breached its continuous disclosure obligations it should contact the DFSA to discuss the matter and seek Guidance on taking steps to ensure that similar breaches are prevented from recurring.
      3. The continuous disclosure obligations form an essential part of maintaining orderly markets and ensuring acceptable levels of investor protection. Where these obligations are not met and the DFSA considers it appropriate, one or more sanctions (set out in the Enforcement module) may be imposed.
      4. Article 32 of the Markets Law allows the DFSA to vary continuous disclosure requirements if:
      a. at the time of the Offer of Securities in or from the DIFC, a Person has made an Offer of Securities in a jurisdiction other than the DIFC; and
      b. that jurisdiction has substantially the same disclosure requirements as provided in Part 6 of the Markets Law 2004 and the Offered Securities Rules.

      OSR 9.2.3

      (1) A Reporting Entity must not disclose any information it is required to disclose by rule 9.2.1 to any other Person prior to the public disclosure in accordance with rule 9.2.1(3) of such information except in strict confidence to:
      (a) its advisors, underwriters or Sponsors;
      (b) an agent employed to release the information;
      (c) Persons with whom it is negotiating with a view to effecting a Transaction or raising finance, including prospective underwriters or Sponsors of an issue of Securities, providers of finance or loans or the placement of the balance of a rights issue not taken up by shareholders;
      (d) the DFSA or another Financial Services Regulator where such disclosure is necessary or desirable for the regulator to perform its functions;
      (e) a Person to whom the Reporting Entity discloses information in accordance with a lawful requirement; or
      (f) a Person to whom the information is disclosed in the necessary course of the business of the Reporting Entity.
      (2) A Reporting Entity must advise such recipients in writing, prior to them receiving the information, that the information is confidential and that they and any Person privy to the information should not deal in the relevant Securities (or any other Related Investment) before the information has been made available to the public.

      OSR 9.2.4

      A Reporting Entity must nominate two Persons to be its main points of contact with the DFSA in relation to continuing disclosure and other continuous obligations under this chapter.

      OSR 9.3 Disclosure exceptions

      OSR 9.3.1

      (1) A Reporting Entity who intends not to disclose information it is required to disclose under this chapter must notify the DFSA by completing and submitting the appropriate form in PFN and enclosing:
      (a) a confidential report setting out the relevant information that is required to be disclosed under the Rules; and
      (b) the reason why the Reporting Entity believes on reasonable grounds that the relevant information would fall within the grounds prescribed under Article 24(1) of the Markets Law 2004.
      (2) A notification under (1) must be in English, and all documents accompanying the notification must be either in the English language or accompanied by an English translation.

      OSR 9.3.2

      By making a notification under rule 9.3.1 the Reporting Entity undertakes that the application is true, accurate and not misleading and does not omit anything of which the DFSA would reasonably be expected to be made aware of in the circumstances of the case.

      OSR 9.3.3

      A Reporting Entity which has made a notification under rule 9.3.1 in respect of which the DFSA has taken no action must notify the DFSA promptly if:

      (a) there is a material change of circumstances such that the reason for the notification is no longer valid; or
      (b) it becomes aware, or there are reasonable grounds to suspect, that Persons with knowledge of the material change are purchasing or selling Securities or any other Related Investment.

      OSR 9.4 Other continuing obligations

      OSR 9.4.1

      A Reporting Entity must comply with the relevant continuing obligations set out in part 2 of App3, App4 and App5.

      OSR 9.4.1 Guidance

      Where the Reporting Entity cannot comply with a requirement in part 2 of App3, App4 or App5 because it is not the Issuer it may apply to the DFSA for a waiver or modification of the relevant requirement.

      OSR 9.4.2

      (1) The DFSA may by written notice impose additional continuing obligations on a Reporting Entity with immediate effect or from such date and time as may be specified if it is satisfied that it is in the best interests of the DIFC.
      (2) If the DFSA is minded to impose additional continuing obligations and provide an opportunity to make representations on a Reporting Entity, it will notify the Reporting Entity in writing prior to imposing such obligations, unless (3) applies.
      (3) Where the DFSA concludes that any delay likely to arise as a result of allowing a Reporting Entity to make representations would be prejudicial to the interests of the DIFC, it will not provide the Reporting Entity with the prior opportunity to make representations.
      (4) The Regulatory Appeals Committee has jurisdiction to hear and determine any appeal in relation a decision to impose additional continuing obligations on a Reporting Entity.

      OSR 9.4.3

      The DFSA may require a Reporting Entity to appoint a Sponsor to perform such role as set out in chapter 11.

      OSR 9.4.3 Guidance

      In determining whether to require a Reporting Entity to appoint a Sponsor, the DFSA will consider all of the surrounding facts and circumstances of the matter, including, but not limited to, the level of experience and expertise of the management and Directors of the Reporting Entity in respect of compliance with the obligations of a Reporting Entity.

      OSR 10 Disclosure of Interests by Connected Persons

      OSR 10.1 Application

      OSR 10.1.1

      This chapter applies to:

      (a) a Connected Person; and
      (b) a Person when he ceases to be a Connected Person.

      OSR 10.1.1 Guidance

      1. Article 25 of the Market Law 2004 requires disclosures by Connected Persons of a Reporting Entity in relation to Financial Interests in or relating to Reporting Entities.
      2. Under Article 25(5) of the Markets Law 2004, a Person is a Connected Person if:
      a. he is a Director or is involved in the senior management of the Reporting Entity or an Associate Body Corporate of the Reporting Entity;
      b. he owns or beneficially owns voting Securities carrying more than 5% of the votes attached to all voting Securities of the Reporting Entity or an Associate Body Corporate of the Reporting Entity; or
      c. he is a Director of or is involved in the senior management of any Person who owns or beneficially owns voting Securities carrying more than 5% of the votes attached to all voting Securities of the Reporting Entity.

      OSR 10.2 Disclosures of financial interests

      OSR 10.2.1

      For the purpose of Article 25(5)(b) of the Markets Law:

      (a) a Person is deemed to have the Financial Interest of:
      (i) himself;
      (ii) any beneficial interest he holds;
      (iii) any of his Close Relatives;
      (iv) any Person controlled by him;
      (v) any Body Corporate of which he is a Director, or Partnership of which he is a partner; and
      (vi) any Person with whom he acts in concert; and
      (b) a Person is deemed not to have a Financial Interest in (a) if:
      (i) that Person holds the Securities for another Person; or
      (ii) that Person is unaware of his ownership of or entitlement to the Securities because another Person manages his assets.

      OSR 10.2.1 Guidance

      Article 25 provides as follows:

      "(1) A Person who, as the consequence of any event, becomes Connected to and has a financial interest in a Reporting Entity shall file a report with the DFSA within 5 days of the event disclosing any financial interests in Investments in or relating to the Reporting Entity.
      (2) A Person Connected to a Reporting Entity shall file a report with the DFSA within 5 days of the event on the occurrence of any event as a result of which:
      (a) he acquires or ceases to have a financial interest in Investments in or relating to the Reporting Entity;
      (b) the level of financial interest in Investments in or relating to the Reporting Entity in relation to which he has previously filed a report with the DFSA has changed; or
      (c) he ceases to be a Connected Person."

      OSR 10.2.2

      (1) A Person filing a report in accordance with Article 25 of the Markets Law 2004 must complete and submit to the DFSA the relevant form in PFN.
      (2) The report must be accompanied by such documents as are set out in the report form.
      (3) The report may be made public by the DFSA in such manner as it considers appropriate.

      OSR 11 Sponsors

      OSR 11.1 Application

      OSR 11.1.1

      This chapter applies to:

      (a) a Sponsor; and
      (b) a Person upon whom the DFSA has imposed a requirement to appoint a Sponsor.

      OSR 11.1.1 Guidance

      1. Under chapter 4 the DFSA may require an Offeror to appoint a Sponsor, under chapter 5 the DFSA may require an Issuer to appoint a Sponsor and under chapter 8 the DFSA may require a Reporting Entity to appoint a Sponsor.
      2. The appointment of a Sponsor should facilitate the Offeror, Issuer or Reporting Entity's compliance with the relevant Rules.

      OSR 11.2 Appointment of sponsors

      OSR 11.2.1

      (1) Where the DFSA requires a Person to appoint a Sponsor the Person must, prior to making the appointment:
      (a) take reasonable steps to ensure that the proposed Sponsor has the required skills, resources and experience to carry out its obligations under the Rules;
      (b) notify the DFSA of the proposed Sponsor's name and business address; and
      (c) obtain the DFSA's consent to the proposed appointment.
      (2) If requested by the DFSA, a Person must provide the DFSA with information on its appointed or proposed Sponsor with regard to the Sponsor's skills, resources and experience.

      OSR 11.2.2

      (1) A Person must take reasonable steps to ensure that the relevant Employees of the Sponsor are independent of the Person and have appropriately managed any conflict of interest with respect to the Person that may arise.
      (2) A Person must notify the DFSA if it becomes aware, or has reason to believe, that the relevant Employees of the Sponsor are no longer independent of the Person or have a conflict of interest which has not been appropriately managed.

      OSR 11.2.3

      Where a Sponsor appointed by a Person is not suitable in the opinion of the DFSA, or where a Sponsor has not been appointed or has resigned, the DFSA may direct the Person to replace or appoint a Sponsor.

      OSR 11.3 Obligations in relation to offers

      OSR 11.3.1

      When making an Offer, a Sponsor must:

      (a) satisfy itself to the best of its knowledge and belief, having made due and careful enquiry of the Offeror of the Securities and its advisors, that the Offeror has satisfied all applicable conditions for Offering Securities and other relevant requirements;
      (b) provide to the DFSA any information or explanation known to it in such form and within such time limit as the DFSA may reasonably require for the purpose of verifying whether this module is being, and has been, complied with by the Issuer in relation to which it acts as Sponsor; and
      (c) take other steps required in writing by the DFSA.

      OSR 11.4 Obligations in relation to applications for listing

      OSR 11.4.1

      On an application for Listing, a Sponsor must:

      (a) satisfy itself to the best of its knowledge and belief, having made due and careful enquiry of the Issuer of the Securities for Listing and its advisors, that the Issuer has satisfied all applicable conditions for Listing and other relevant requirements;
      (b) satisfy itself to the best of its knowledge and belief that the Issuer is suitable to be listed and that its Directors appreciate the nature of their responsibilities and can be expected to honour their obligations under the Law and Rules.
      (c) provide to the DFSA any information or explanation known to it in such form and within such time limit as the DFSA may reasonably require for the purpose of verifying whether this module is being, and has been, complied with by the Issuer in relation to which it acts as Sponsor; and
      (d) take other steps required in writing by the DFSA.

      OSR 11.5 Obligations in relation to reporting entities

      OSR 11.5.1

      (1) A Sponsor must ensure that a Reporting Entity complies with any applicable provisions in the Markets Law and this module.
      (2) When a Sponsor becomes aware of a failure of the Reporting Entity which he sponsors to comply with its obligations under the Markets Law and this module, he must without undue delay:
      (a) notify the Reporting Entity of the failure and take reasonable steps to ensure it rectifies the failure within a reasonable time; and
      (b) if the Reporting Entity does not or is unable to rectify the failure as soon as practicable:
      (i) notify the DFSA of that fact; and
      (ii) if the continuing obligation is one of disclosure, make the disclosure to the DFSA.

      OSR 11.6 Duty of care of sponsors

      OSR 11.6.1

      A Sponsor has a duty of care to the Person to whom it is appointed.

      OSR 11.7 Co-operation with sponsors

      OSR 11.7.1

      A Person must take reasonable steps to ensure that it and its Employees:

      (a) provide such assistance as the Sponsor reasonably requires to discharge its duties;
      (b) give the Sponsor right of access at all reasonable times to relevant records and information;
      (c) do not interfere with the Sponsor's ability to discharge its duties;
      (d) do not provide misleading or deceptive information to the Sponsor; and
      (e) report to the Sponsor any matter which may significantly affect the financial position of the Undertaking or the price or value of the Securities.

      OSR 11.7.2

      A Sponsor must notify the DFSA of any non co-operation by the Person or its Employees.

      OSR 11.8 Termination of sponsors

      OSR 11.8.1

      Where a Person dismisses its Sponsor, the Person must advise the DFSA in writing without delay of the dismissal, giving details of any relevant facts and circumstances.

      OSR 11.8.2

      Where a Sponsor resigns as Sponsor to a Person, it must advise the DFSA in writing without delay of the resignation, giving details of any relevant facts and circumstances.

      OSR 12 Contraventions, Enforcement and Stop Orders

      OSR 12.1 Application

      OSR 12.1.1

      This chapter applies to every Person to whom the Markets Law 2004 applies and to the same extent in relation to every such Person as that Law.

      OSR 12.1.1 Guidance

      1. Part 9 of the Markets Law 2004 deals with contraventions. Article 54 of the Markets Law provides that the DFSA may apply to the Court or the Financial Markets Tribunal to obtain an order or orders against a Person who has contravened the Markets Law or the Rules as follows:
      "(1) Without limiting the powers of the Court or the Financial Markets Tribunal, either may on the application of the DFSA, make one or more of the following orders in relation to a Person, irrespective of whether a Contravention has occurred or not, if in its opinion, it is in the interest of the DIFC to make the order or orders:
      (a) an order restricting any conduct on such conditions or terms as the Court or the Financial Markets Tribunal thinks fit;
      (b) an order that trading in any Investments cease permanently or for such period as is specified in the order;
      (c) an order that any exemptions contained in the Markets Law or the Rulebook, do not apply permanently or for such period as is specified in the order;
      (d) an order that a Person submit to a review by the DFSA of his practices and procedures and institute such changes as may be directed by the DFSA;
      (e) orders in relation to activities relating to Takeovers, Takeover Offers, mergers or acquisitions of Shares within the DIFC;
      (f) an order that a disclosure be made to the market;
      (g) an order reprimanding a Person described in the order;
      (h) an order that a Person resign one or more positions that the Person holds as a Director or officer of a Company;
      (i) an order that a Person is prohibited from becoming or acting as a Director or officer of any Company;
      (j) an order that a Person is prohibited from making offers of Securities in or from the DIFC;
      (k) an order that a Person is prohibited from being involved in listing companies or Securities within the DIFC;
      (l) an order requiring a Person to disgorge to the DFSA any amounts obtained as a result of the non-compliance with the Markets Law or the Rulebook;
      (m) an order that a release, report, Prospectus, Supplementary Prospectus, Return, financial statement or any other document described in the order:
      (i) be provided by a Person described in the order;
      (ii) not be provided by a market participant described in the order;
      (iii) be amended by a market participant to the extent that amendment is practicable;
      (n) an order that a Person pay a fine; or
      (o) any order that the Court or Financial Markets Tribunal thinks fit, in order to maintain the integrity of the DIFC and ensure an efficient, honest, fair and transparent market.
      (2) The Court or Financial Markets Tribunal may, on the application of the DFSA, make interim and ex parte orders specified in Article 54(1) (a), (b), (c), (d), (e), (f), (m) and (o).
      (3) An order under Article 54(1) and (2) may be subject to such terms and conditions as the Court or the Financial Markets Tribunal may impose."
      2. The purpose of the provisions of part 9, along with the powers of the DFSA set out in the Enforcement module of the Rules is:
      (a) to foster and maintain fairness, transparency and efficiency in the Financial Services industry (namely, the Financial Services and Related activities carried on) in the DIFC;
      (b) to foster and maintain confidence in the Financial Services industry in the DIFC;
      (c) to foster and maintain the financial stability of the Financial Services industry in the DIFC, including the reduction of systemic risk;
      (d) to prevent, detect and restrain conduct that causes or may cause damage to the reputation of the DIFC or the Financial Services industry in the DIFC, through appropriate means including the imposition of sanctions;
      (e) to protect direct and indirect users and prospective users of the Financial Services industry in the DIFC;
      (f) to promote public understanding of the Regulation of the Financial Services industry in the DIFC; and
      (g) to pursue any other objectives as the Ruler may from time to time set under DIFC Law.
      3. The enforcement powers of the DFSA will be exercised in accordance with the DFSA's enforcement philosophy as set out in the Enforcement module (ENF). In summary, the DFSA's enforcement philosophy is:
      (a) to adopt a pro-active approach to enforcement, focusing on reducing the risk of non- compliance with applicable legislation;
      (b) to work closely with home Regulators of international firms to ensure a co-ordinated approach;
      (c) to exercise its enforcement powers only when necessary to ensure that the DIFC is operating fairly and transparently and in such a way as to ensure that it has the confidence of the Financial Services industry and its customers;
      (d) to act fairly, openly and accountably in the exercise of its enforcement powers; (e) to act swiftly and decisively to stop conduct which threatens the integrity of the DIFC, to minimise its effects and to prevent such conduct re-occurring;
      (f) to publish details of enforcement action, but not to publicise the commencement or conduct of investigations.
      4. Where there has been a contravention, the DFSA will use the enforcement powers set out above unless circumstances prevent it.
      5. It should be noted that the enforcement powers set out above may also be exercised against a Director or other officer of any entity that commits a contravention.

      OSR 12.2 Stop orders

      OSR 12.2 Guidance

      1. The DFSA has absolute discretion in its decision to issue a stop order under Article 16 of the Markets Law, and any stop order will have immediate effect unless otherwise specified by the DFSA.
      2. A stop order may be issued where the DFSA is satisfied that an Offer has contravened or would contravene these Rules or the Markets Law. It is not necessary, therefore, that a contravention be established.
      3. If an Offeror does not comply with the provisions of a stop order to which it is subject, the DFSA will be entitled to exercise its enforcement powers in relation to the Offeror and any purchaser or transferee of the Securities to which the stop order relates as it sees fit.
      4. The DFSA has discretion to decide whether it is prejudicial to the interests of the DIFC or participants in the market to provide the opportunity to make representations prior to the issue of a stop order.
      5. In determining whether it is prejudicial to the interests of the DIFC or participants in the market to provide the opportunity to make representations prior to the issue of a stop order, the DFSA will take into account all relevant surrounding circumstances, including, but not limited to, the following:
      (a) the seriousness of any suspected contravention of these Rules or the Markets Law and the steps that need to be taken to correct that contravention;
      (b) the Offeror's conduct in identifying the contravention and taking action in respect thereto; and
      (c) the impact that the issue of a stop order will have on the Offeror's business or on its customers.
      6. Where an opportunity to make representations is afforded, whether before or after the issue of a stop order, the DFSA will provide the Offeror in question with a notice setting out the following information:
      (a) that the DFSA has decided to issue a stop order in relation to the Offeror;
      (b) the DFSA's reasons for its decision;
      (c) that the Offeror may make representations in Person and/or in writing within a specified time from the date of the notice; and
      (d) the name and contact details of the individual exercising the delegated authority of the DFSA in making the decision to issue a stop order.
      7. If the Offeror decides to make no representations, or to make representations in writing, then the DFSA will decide whether to issue the stop order on the basis of the material then available, subject to seeking clarification of any issues that arise from the written submissions.
      8. Should the Offeror wish to make representations in Person, it should notify the DFSA as soon as possible and within the timeframe provided for making representations. The notification should specify matters on which the Offeror wishes to make oral representations, how long the Offeror expects the representations to take and provide the names of any representatives appointed to attend the meeting at which the representations will be made.
      9. If after notifying the DFSA of its intention to make representations in Person, the Offeror chooses not to make those representations, the DFSA will nevertheless decide the matter.
      10. An Offeror may appoint one or more representatives of its choice (who may be legally qualified) to attend the meeting at which representations will be made. The representatives may make or assist in making the representations.
      11. The DFSA will specify a time as soon as is reasonably possible after receiving the notification for the meeting to take place. The DFSA may specify the place the meeting will take place and may specify that it will take place in private. The DFSA may limit the type, length and content of any representations. The DFSA may ask the Offeror or the Offeror's representative at the meeting to clarify any issues arising out of the representations.
      12. Once the DFSA has received submissions in writing or in Person, the DFSA will inform the Offeror without undue delay of:
      (a) its decision;
      (b) the date of effect of the decision; and
      (c) the fact that the Offeror has the right to appeal the decision to the Regulatory Appeals Committee.

      OSR 13 Fees

      OSR 13.1 Fees

      OSR 13.1.1

      This section applies to any Person to whom any provision in this module applies.

      OSR 13.1.2

      Where a Fee is payable for any application to the DFSA pursuant to a rule in this module, the application will not be regarded as submitted until the Fee and any supplementary Fee has been paid in full.

      OSR 13.1.3

      Where an annual Fee or supplementary Fee is due from any Person under a provision of these Rules, the Person must pay it by the date on which it becomes due. If he fails to do so then, without limiting the right of the DFSA to take any other action the sum due shall be increased by 1% for each calendar month, or part of a calendar month, that it remains outstanding beyond the due date.

      OSR 13.1.3 Guidance

      If a Fee is not paid by a Person by the date on which it becomes due, the Person is in breach of a rule and the DFSA is entitled to take action including, but not limited to, taking steps to suspend or cancel Listing.

      OSR 13.1.4

      (1) The DFSA may reduce, waive or refund all or part of any Fee if it considers that, in the exceptional circumstances of a particular case, it would be equitable to do so.
      (2) The DFSA may require a Person to pay to the DFSA a supplementary Fee in circumstances where it expects to incur substantial additional costs in dealing with an application.
      (3) In cases referred to in (2) the DFSA will notify the Person as soon as reasonably possible of the amount of the supplementary Fee.

      OSR 13.2 Application fees

      OSR 13.2.1

      An applicant for Listing, and an Offeror who files a Prospectus, must pay:

      (a) the applicable Fee specified in App7; and
      (b) any supplementary Fee required by the DFSA.

      OSR 13.3 Annual fees

      OSR 13.3.1

      A Reporting Entity must pay to the DFSA:

      (a) the applicable annual Fee specified in App7; and
      (b) any supplementary annual Fee required by the DFSA.

      OSR 13.3.2

      (1) The initial annual Fee must be paid in full to the DFSA within twenty one days of the date on which Listing is granted.
      (2) Subsequent annual Fees must be paid in full to the DFSA on or before the first day of January of any calendar year.

      OSR 13.3.2 Guidance

      In regard to the payment of an annual Fee on or before first day of January, invoices will be issued at least twenty one days before that date.

      OSR 14 Waivers or Modifications

      OSR 14.1 Applications to waive or modify the markets law and rules

      OSR 14.1 Guidance

      Under Article 58 of the Markets Law and Article 25 of the Regulatory Law, the DFSA may waive or modify the application of the Markets Law and Rules.

      OSR 14.1.1

      A Person wishing to seek a waiver or modification of a provision of the Law or Rules as it applies to him, must:

      (a) apply in writing to the DFSA:
      (b) clearly identify the provision in relation to which he seeks a waiver or modification;
      (c) ensure that the application is accompanied by a statement of the reasons supporting the application; and
      (d) pay any prescribed Fee.

      OSR 14.1.2

      In considering the application, the DFSA may:

      (a) carry out any enquiries which it considers appropriate;
      (b) require the applicant to provide additional information in such form as the DFSA considers appropriate;
      (c) require any information furnished by the applicant to be verified in such manner as the DFSA may specify; and
      (d) take into account any information which it considers appropriate in relation to the application.

      OSR App 1 Eligibility Criteria for Listing

      OSR App 1 Part 1: Criteria relating to an applicant

      Item Criterion for eligibility Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      1. The DFSA must be of the view that the applicant and its Securities are suitable for Listing and that there is (or is to be) an adequate and open market in the Securities for which Listing is sought. Where an application is made for Listing in respect of Shares, there must be a minimum free float of 25% of the Listed Shares. X X X X X X X
      2. An applicant must have published audited accounts which cover at least three years, and the period to which the accounts relate must not end more than six months prior to the date of the Listing documents and must be produced using accounting and auditing standards acceptable to the DFSA. These accounts must have been reported on by the auditors without qualification. X   X X X    
      3. The Directors must have appropriate experience and expertise in the business of the Applicant and exhibit high standards of integrity. X   X X X    
      4. An applicant may only issue Convertibles and Warrants over Shares where the total rights from the subscription from Convertibles and Warrants into Shares does not exceed 20% of the outstanding Share capital. X   X        
      5. The applicant must ensure that any requirements of an Authorised Market Institution of which the Securities are to be admitted to trading are fulfilled. X X X X X X X
      6. The applicant of the Certificates must hold on trust (or under equivalent arrangements) for the sole benefit of the Certificate holders the underlying Securities to which the Certificates relate, all rights pertaining to the underlying Securities and all Money and benefits that it may receive in respect of them, subject only to payment of the Remuneration and proper expenses of the Issuer of the Certificates.       X X    
      7. The applicant of the Certificates must operate in a jurisdiction where the underlying Securities would not form part of the issuer's assets on bankruptcy or insolvency. X X       X X    
      8. The applicant of the Certificates in relation to the underlying Securities must have debt or equity listed on an Exchange acceptable to the DFSA.       X X    
      9. Islamic Products

      Where the relevant Securities are held out as being in compliance with Shari'a, the Issuer must:
      (a) appoint a Shari'a Supervisory Board that meets the requirements of a Shari'a Supervisory Board required to be appointed by an Authorised Firm pursuant to the requirements of the Law Regulating Islamic Financial Business, DIFC Law No. 12 of 2004, and any Rules made under that Law as if a reference to Authorised sFirm was a reference to the Issuer; and
      (b) ensure that the Shari'a Supervisory Board advises, in respect of Shari'a compliance, on all aspects of the offering including advice on the information to be provided.
      X X X X X X X

      OSR App 1 Part 2: Criteria relating to securities

      Item Criterion for eligibility Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      10. Any restrictions on transferability which apply to the Securities must be acceptable to the DFSA. X X X X X X X
      11. Convertible Securities may only be listed if they convert into Listed Securities or Securities listed on an Exchange acceptable to the DFSA.     X   X    
      12. Where the Securities provide a Return linked to or determined by reference to another Security, that other Security must:
      (a) be Listed or subject to chapter 9; or
      (b) be Listed or subject to disclosure requirements satisfactory to the DFSA in another jurisdiction.
                X X
      13. The whole Class of Securities to which the Securities belong must be Listed. X X X X X X X
      14. All Securities within a Class of Securities must carry the same rights. X X X X X X X
      15. Listed Securities must fulfil settlement requirements and be admitted to trading on an Authorised Market Institution. X X X X X X X
      16. Holders of Securities must have the right to secure methods of ownership registration. X X X X X X X
      17. Holders of Securities must have specified rights to share in the profits of the Issuer. X       X    
      18. Holders of Shares must be able to vote in Person or by proxy at shareholders' meetings, and equal effect must be given to votes whether cast in Person or by proxy. X            
      Certificates
      19. Certificates must not impose obligations on their Issuer other than to the extent necessary for the protection of the Certificate holders' rights to and the transmission of entitlements of the underlying Securities.       X X    
      20. Neither the underlying Securities nor any such rights, Money or benefits may be, or be liable to be treated as, assets of the Issuer of the Certificates, nor may the Certificates represent liabilities of the Issuer of the Certificates, under the law (including insolvency law) of the place of the Certificate Issuer's incorporation, the place of incorporation of the Issuer of the underlying Securities, the place of issue of the Certificates or the place of administration of the trust or other arrangement under which the underlying Securities are held.       X X    
      21. At the time of an issue of Certificates the payments arising from the underlying Securities must be sufficient to meet the payments required under the Certificates.       X X    

      OSR App 2 Contents of Prospectuses

      OSR App 2 Guidance

      The objective of a Prospectus is to provide information concerning the Issuer that an investor needs in order to make an informed Investment decision. This Appendix sets out specific disclosure requirements that are in addition to the general requirements under Article 15 of the Markets Law 2004 to provide full, true and plain disclosure of all the material facts relating to the Issuer and the Securities to be distributed that will enable the investor to make an informed Investment decision in the circumstances.

      Item Criterion for contents of Prospectus Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      PART 1: INFORMATION ABOUT THE Issuer (REGISTRATION STATEMENT)
      1. As applicable, the full name, registered number, address, jurisdiction, relevant law and date of incorporation of the Issuer. X X X X X X X
      2. If the Issuer is a Member of a Group, a brief description of the Group explaining the Issuer's position within that Group. X   X X X X X
      3. The principal administrative establishment is different from the registered office of the Issuer. X X X X X X X
      4. The date the Prospectus was signed by the Directors in accordance with item 7. In the case of Government Securities, the date the Prospectus was signed by the responsible or relevant authority. X X X X X X X
      5. Brief details of how and on what basis the Securities will be distributed, the names of any advisors and underwriters in relation to the Securities and a statement to the effect that no Securities will be distributed under the Prospectus later than twelve months after the date of the Prospectus. X X X X X X X
      6. Where the Issuer has a fixed life, this must be stated together with the end date. X X X X X X X
      7. A signed statement by the Directors of the Issuer that:
      (a) the Prospectus complies with the Offered Securities Rules and Markets Law 2004; and
      (b) the Directors accept responsibility jointly and severally for the information contained in the Prospectus and believe that there are no other facts, the omission of which, would make the Prospectus or any statement therein misleading or deceptive.
      X   X X X X X
      8. The names, addresses and professional qualifications of the Directors of the Issuer and, where relevant, the Directors of the ultimate Holding Company of the Issuer. X   X X X X X
      9. The names, addresses and professional qualifications of the auditors of the Issuer for the last three years. X   X X X X X
      10. Audited financial accounts of the Issuer of the Securities for three completed financial years prior to the date of the Prospectus prepared in accordance with the International Financial Reporting Standards or other reporting standards acceptable to the DFSA, or where appropriate, AAOIFI standards. Where the Issuer is a Member of a Group which prepares consolidated accounts, the requirement to present individual accounts may be dispensed with, provided that the consolidated accounts are published. Where the Issuer has been created for a special purpose, and does not have the relevant accounting pre-requisites, the requirements may be dispensed with. X   X X X X X
      11. Where more than nine months have elapsed since the end of the financial year to which the most recent audited accounts of the Issuer relate, an interim financial statement covering at least the first six months following the end of that year. X   X X X X X
      12. A statement by the Directors that in their opinion the working capital available to the Issuer is sufficient or, if not, how it is proposed to provide the additional working capital. X     X      
      13. The name, address, professional qualifications of any Expert responsible for an Expert statement or report contained in the Prospectus and the date on which the Expert statement or report was made or produced. Further, the Prospectus shall provide disclosure of any conflicts of interests or perceived conflicts of interests with the Issuer, including the nature and value of any benefit paid by the Issuer to the Expert taking account of: Investments held or to be held, Fees and commissions paid or to be paid to the Expert or persons associated with the Expert. X   X X X X X
      14. In the case of a Property, mineral or scientific research company, a report by an Expert on the assets or rights owned by the Issuer prepared at a date which shall be no later than three months before the date of the Prospectus and disclosure in accordance with item 13 of App2. X   X X X X X
      15. A detailed description of the Issuer's actual and proposed principal activities, stating the main Categories of products sold and services performed. The information should include the following:
      (a) the history of the Issuer;
      (b) a description of the principal activities and business of the Issuer;
      (c) any major customers, suppliers or other material dependencies of the Issuer;
      (d) a description of the relationship between the Issuer and its affiliates;
      (e) relevant Security or principal Investments by the Issuer; and
      (f) where the Issuer belongs to a Group, a brief description of the Group and relevant Material Information in relation to the Group's activities.
      X   X X X    
      16. The Issuer must include the following information:
      (a) a statement as to the Issuer and the Group's material financial and trading position and trading prospects over the next twelve months;
      (b) a statement of any material adverse change in the financial position or trading prospects of the Issuer and the Group since the last audited accounts or later interim statement;
      (c) a summary of the Issuer's annual accounts relating to the last completed financial year; and any significant events that may have had an effect on these accounts.
      X   X X X    
      17. The identity of any Person known to hold more than 5% of the voting Shares of the Issuer. X     X      
      18. Details of the holdings of the Directors or proposed Directors in the voting Shares of the Issuer, and of any contract, borrowings or other arrangement between the Directors or proposed Directors and the Issuer or with other persons to become a proposed Director. X     X      
      19. A summary of the provisions of the constitution of the Issuer with regard to:
      (a) any power enabling a Director to vote on a proposal, arrangement, or contract in which he is materially interested;
      (b) any power enabling the Directors, in the absence of an independent quorum to vote on Remuneration (including pension or other benefits) to themselves or any Members of their body;
      (c) borrowing powers exercisable by the Directors and how such borrowing powers be varied;
      (d) retirement or non-retirement of Directors under an age limit;
      (e) any arrangements by which a single investor or Group of investors may exercise significant influence over the Issuer; and
      (f) any other aspects of the constitution of the Issuer which may be relevant to investors.
      X   X X X X X
      20. Summary of the total of any Options or other rights granted in respect of Shares in the Issuer to any Person, along with an estimate of the number of Shares which would be created if such rights were to be exercised. X     X      
      21. Information on any legal proceedings, current or threatened, which could have a significant impact on the Issuer or Group's position or on the price or value of the Securities. X   X X   X X
      22. An Issuer must disclose any conflicts or potential conflicts of interest that any Connected Persons may have. Any Related party transactions and any disclosures must include, where relevant, all transactions and relationships between the Issuer and any Connected Person, including:
      (a) the parties to the transaction;
      (b) the date of the transaction;
      (c) the relationship of each of the Connected Persons to the Issuer;
      (d) the value of the transaction;
      (e) any Security holder approvals obtained in connection with the transaction; and
      (f) any future transactions involving those parties.
      X   X X   X X
      23. An explanation of any significant matter that investors would reasonably require in relation to the Issuer and the Issuer's jurisdiction. Any such explanation should be given appropriate prominence depending on the nature of the matter concerned and its significance. X   X X X X X
      24. A summary of the Issuer's responsibilities and obligations in respect of the Certificates including the obligations and responsibilities in making certain payments as and when payments on the underlying Securities are received. X     X      
      25. Islamic Products

      Where the relevant Securities are held out as being in compliance with Shari'a:
      (a) the Members of the Shari'a Supervisory Board appointed by the Issuer and which undertook the review of the relevant Securities; and
      (b) details of the qualifications and experience of each of those Shari'a Supervisory Board Members.
      X X X X X X X
      PART 2: INFORMATION ABOUT THE Securities (ISSUE NOTE)
      26. Where the Issuer has already filed a Registration Statement, the latest Issue Note must contain details of any change in the information provided in the Registration Statement which should be highlighted. X X X X X X X
      27.
      (a) The proposed dates for the following in respect of the Securities:
      (i) admission to the Register of Listed Securities by the DFSA;
      (ii) admission to trading on an Authorised Market Institution;
      (iii) admission to listing or trading by a Financial Service Regulator or Exchange in a jurisdiction outside the DIFC; and
      (iv) any other such comparable event.
      (b) The actual dates of any of the following events in respect of the Securities:
      (i) when the Securities were admitted to the register of Listed Securities by the DFSA;
      (ii) when the Securities were admitted to trading on an Authorised Market Institution;
      (iii) when the Securities were Listed or admitted to trading by a Financial Services Regulator or Exchange in a jurisdiction outside the DIFC; and
      (iv) any other comparable event Related to the actual Listing or trading of the Securities.
      X X X X X X X
      28. Terms and conditions in relation to the Issue including:
      (a) the number of Securities offered;
      (b) the price or price range of the Securities;
      (c) the period in which the Securities may be offered, including the opening and closing dates;
      (d) the manner of allocation of Securities to applicants including the manner in which Securities are allotted in the event of over subscription;
      (e) where the Securities to be Offered confer the right to subscribe for new Securities; details of such rights, including a statement of the maximum number of Securities which would be created if the rights were exercised in full;
      (f) proposed date for allotment of Securities;
      (g) details of the current constitution of the share capital and the relevance of the issue of the Securities in relation to the share capital;
      (h) all relevant details of the underwriter and the plan of distribution including the nature of the obligations of the underwriter; and
      (i) in the event of the Offer not proceeding, the details of the procedure and means under which the funds will be returned.
      X X X X X X X
      29. A summary of the nature and the rights attaching to the Securities, including any restrictions on transferability and any arrangements for settlement of transfers. X X X X X X X
      30. Methods of payment for the Securities, particularly as regards the paying up of Securities which are not fully paid or are payable by instalments. X X X X X X X
      31. A description of the manner in which the capital raised by the issue will be used by the Issuer. X   X X X    
      32. Particulars of any commissions or other Fees to be paid by the Issuer in relation to the issue. X   X X X    
      33. A statement in bold, on the front page of the Prospectus as follows:
      (a)
      (i) In the case of a Prospectus relating to an Offer of Unlisted Securities:

      "A copy of this Prospectus has been filed and registered with the Dubai Financial Services Authority (the "DFSA") in accordance with the Markets Law 2004 and the Offered Securities Rules. In accordance with the Rules, the DFSA has no responsibility for reviewing or verifying any documents in connection with the offers of Unlisted Securities. The DFSA has not approved this Prospectus nor has it reviewed or verified the information in it. If you do not understand the contents of this document you should consult an authorised financial advisor"; or
      (ii) In the case of a Prospectus relating to an Offer of Listed Securities:

      "A copy of this Prospectus has been filed and registered with the Dubai Financial Services Authority (the "DFSA") in accordance with the Markets Law 2004 and the Offered Securities Rules. In accordance with the Rules, the DFSA has no responsibility for reviewing or verifying any documents in connection with the offers of Listed Securities. The DFSA has not approved this Prospectus nor has it reviewed or verified the information in it. If you do not understand the contents of this document you should consult an authorised financial advisor"; and
      (b) In the case of a Prospectus relating to a Listing:

      "Application has been made for the admission of the Securities to the Register of Listed Securities maintained by the Dubai Financial Services Authority (the "DFSA"). In connection with the application, a copy of this Prospectus has been filed and registered with the DFSA in accordance with the Offered Securities Rules. If you do not understand the contents of this document you should consult an authorised financial advisor"; and
      (c) Where the relevant Securities are held out as being compliant with Shari'a:

      "A copy of this Prospectus has been filed and registered with the Dubai Financial Services Authority (the "DFSA") in accordance with the Markets Law 2004 and the Offered Securities Rules. In accordance with the Rules, the DFSA has no responsibility for the contents of the Prospectus and has not approved this Prospectus nor has it reviewed or verified the information in it, nor has it determined whether it is Shari'a compliant. If you do not understand the contents of this document you should consult an authorised financial adviser".
      X X X X X X X
      34. The identity of the seller of the Securities where the Person making the Offer is not the Issuer. X X X X X X X
      35. The nature of the risks involved in investing in the Securities including:
      (a) the material risks associated with investing in the Issuer, and where applicable, any risks associated with the assets to be acquired using the proceeds of the distribution;
      (b) the effect that the material risks may have on the Issuer together with a discussion of how the risk could affect the business, operating results and financial condition of the Issuer;
      (c) any steps proposed by the Issuer to mitigate or manage the risks; and
      (d) general and specific risks relating to the industry or jurisdiction in which the Issuer operates.
      X   X X X X X
      36. Sufficient information to enable a Person to form an opinion concerning the creditworthiness of the Issuer including earnings coverage ratio and relevant credit ratings.     X   X    
      37. If the Securities are asset backed, describe all the material attributes of the asset backed Securities, including:
      (a) the asset backing the product;
      (b) rate of interest or stipulated yield or any premium;
      (c) the date for repayment of the principal Return of capital;
      (d) provisions for permitting or restricting the issuance of additional securities;
      (e) the nature, order and priority of the entitlements of holders; and
      (f) any events, covenants, standards or pre-conditions that may impact on payments or distributions to be made to the investor.
          X   X    
      38. An indication of the legislation under which the Certificates and the underlying Securities have been created and of the courts of competent jurisdiction in the event of litigation including details of the consequences of an event of default occurring on the underlying Securities.       X X    
      39. An indication of the possibility of obtaining the conversion of the Certificates into the underlying Securities, the procedure for such conversion, and Commission and costs involved with such a conversion.       X X    
      40. The provisions relating to the exercise of and benefit from the rights attaching to the underlying Securities, in particular voting rights. The conditions on which the Issuer of the Certificates may exercise such rights and measures envisaged to obtain the instructions of the Certificate holders and the right to share in profits and any liquidation surplus.       X X    
      41. The names and addresses of the paying agents and trustees and fiscal agents in relation to the creation of the Certificate.       X X    
      42. Details of any Bank or other guarantees attached to the Certificates and intended to underwrite the Issuer's obligations.       X X    
      43. The amount of the commissions and costs to be borne by Certificate holders in connection with the payment of coupons or other income and the creation of additional Certificates.       X X    
      44. An indication of the tax arrangements with regard to any taxes and Charges to be borne by Certificate holders and levied in the jurisdictions where the Certificates are issued.       X X    
      45. Where the Securities are of a specialist nature, the underlying Securities must be listed on an Exchange acceptable to the DFSA.       X X    
      46. Confirmation that under the laws governing the Issuer's activities the underlying Securities would not form part of the Issuer's assets in the event of bankruptcy or insolvency and that there is no Credit Risk to the Issuer attaching to the Certificates.       X X    
      47. The names of Banks with which the main accounts relating to the underlying Securities are held.       X X    
      48. Where the relevant Securities are held out as being in compliance with Shari'a:
      (a) the opinion of the Shari'a Supervisory Board in respect of whether the Securities are Shari'a compliant;
      (b) a description of the structure of the underlying Transaction and an explanation of the flow of funds; and
      (c) the disclosures required by the Shari'a Standards published from time to time by AAOIFI in respect of Investment Sukuks insofar as are applicable.
      X X X X X X X

      OSR App 3 Continuing Obligations

      OSR App 3 Part 1: Disclosure Relating to the Issuer

      Item Event Requirements Time Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      PRICE SENSITIVE INFORMATION
      1.
      (a) Material developments that are as regards the Securities not public knowledge and which may be Price Sensitive;
      (b) Any material change in the business, financial condition, performance or expectation of performance that may be Price Sensitive; and
      (c) Impending or strategic developments or matters in the course of negotiations where there is reason to believe that a breach of confidence has or is likely to occur in relation to Price Sensitive Information.
      Public disclosure of the development or change as the case may be, including all Price Sensitive Information relating to it. Without delay. X   X X X X X
      2. Belief that a breach of confidence has occurred or is likely to occur in relation to Price Sensitive Information (for example, evidenced by a press article or share price movement). Disclosure to the DFSA of the breach (or likely breach), the matter to which it relates and the text of an announcement containing all information relating to the matter that would be required to be disclosed if a breach has occurred. Without delay. X X X X X X X
      The Board
      3. Any change to the Board of the Issuer including:
      (a) The appointment of a new Director of the board;
      (b) The resignation, retirement or removal of an existing Director; and
      (c) Changes to any important functions or executive responsibilities of a Director.
      Public disclosure of:
      (a) The effective date of the change (if it has been decided);
      (b) Whether the position is executive or non- executive; and
      (c) The nature of any functions responsibility of the position.
      Without delay. X     X   X  
      4. Information in respect of a new Director appointed by an Issuer, unless such details have already been disclosed Public disclosure of:
      (a) All directorships past or present held by the Director in any other Company in the previous five years;
      (b) The professional qualifications and experience of the Director;
      (c) Whether the Director is to be regarded as independent by the Issuer;
      (d) Details of the process by which the Director was selected;
      (e) Any unspent convictions relating to serious criminal offences;
      (f) Any bankruptcies or individual voluntary arrangements of the Director;
      (g) Any compulsory liquidations, creditors voluntary liquidations, company voluntary arrangements, receivership or any composition or arrangement with its creditors generally or any Class of its creditors of any Issuer where such an individual was a Director at the time of or within the 12 months preceding such events;
      (h) Any public criticisms or disqualifications of the individual by statutory or regulatory authorities and whether the individual has ever been disqualified by a Court from acting as a Director of a Company or from acting in the management or conduct of the affairs of any Company or, if there are no such details to be disclosed, that fact.
      (a) If not disclosed in item 3(a), then within 7 days of the appointment of the relevant Member of the Board becoming effective.
      X     X   X  
      5. Where the Issuer has appointed a Shari'a Supervisory Board, details of any changes to the membership of the Shari'a Supervisory Board. Public disclosure of:
      (a) the identity, qualifications and experience of any new Shari'a Supervisory Board members;
      (b) the identity of any Shari'a Supervisory Board Members who resign or are dismissed;
      (c) the effective date of the change; and
      (d) reasons for the change in membership.
      Without delay. X   X X X X X
      6. A breach of the Directors' Dealing Code Disclosure to the DFSA of the nature, content and details of the breach. Without delay.   X X X X X X
      Business of the Issuer
      7. Large transactions:
      (a) The making or any significant change to any material Investments outside the ordinary course of business of the Issuer (being any Investments equal to or greater than 5 per cent of the book value of the existing net assets of the Issuer) or the purchase of long term assets for a significant amount; or
      (b) the incurring of any material change to any significant debt outside the usual and ordinary course of business of the Issuer (being debt with an amount equal to or greater than 5 per cent of the book value of the existing net assets of the issuer).
      Public disclosure relating to:
      (a) Any decision to enter into such a transaction;
      (b) Any significant change affecting any matter contained in an earlier disclosure, or new matter which would have been required to be mentioned in the earlier disclosure if it had arisen prior to the date of that disclosure; and
      (c) as full description of the event, activity Transaction proposed or effected as the case may be.
      Without delay. X     X   X  
      RELATED PARTY TRANSACTIONS
      8. A Transaction which results in:
      (a) an acquisition or realisation of assets by a Reporting Entity or any of its subsidiaries including the exercise by the Reporting Entity or any of its subsidiaries on option granted to it to acquire or realise assets, from or to a Connected Person;
      (b) an acquisition or realisation by a Reporting Entity or any of its subsidiaries of an interest in any company, a Substantial Shareholder of which is, or is proposed to be, a Director, or Controller of the acquiring or realising Reporting Entity or any of its subsidiaries or an Associate of such Director, or Controller of the Reporting Entity or any of its subsidiaries;
      (c) the grant by a Reporting Entity or any of its subsidiaries of an option to a Connected Person to acquire or dispose of assets or to subscribe for new Securities of the Reporting Entity or any of its subsidiaries, other than under an Employee share scheme;
      (d) an Issue by a Reporting Entity or any of its subsidiaries of new Securities for cash to a Connected Person;
      (e) a Reporting Entity or any of its subsidiaries taking an interest in another company any part of the share capital of which has been, or is to be, acquired whether by subscription or otherwise by a Director or Controller or an Associate of any of them of the Reporting Entity or of any of its subsidiaries when the Reporting Entity's or its subsidiaries' interest is to be either one of a fixed income nature or shareholding to be acquired on less favourable terms than those granted to the Director or Controller or an Associate of any of them;
      (f) a Director or Controller or an Associate of any of them of the Reporting Entity or any of its subsidiaries subscribing a shareholding in another company on anything other than arm's length terms, the Reporting Entity or any of its subsidiaries having previously taken and not disposed of an interest in the other company;
      (g) a Transaction, a principal purpose or effect of which, is the granting of financial assistance either:
      (i) by a Reporting Entity or any of its subsidiaries to a Connected Person, excluding the granting of financial assistance upon normal commercial terms in the ordinary and usual course of business but including the granting of financial assistance to a company in which the Reporting Entity or any of its subsidiaries and a Person who is a Connected Person otherwise than by reason only of his shareholding in the company in question are both shareholders, whether Reporting Entities, proportional share of the financial assistance is greater than its proportional shareholding in such company or, in the case of a guarantee, where the guarantee given by the Reporting Entity is a joint and several guarantee;
      (ii) by a Connected Person to a Reporting Entity or any of its subsidiaries, excluding the granting of financial assistance upon normal commercial terms or better which is received by the Reporting Entity or any of its subsidiaries in the ordinary and usual course of its business;
      (i) the grant of an indemnity by a Reporting Entity or any of its subsidiaries to, or for the benefit of, a Connected Person excluding in the case of a Bank, the granting of an indemnity upon normal commercial terms in the ordinary and usual course of business; and
      (j) a Reporting Entity or any of its subsidiaries giving Security over any of its assets to a Connected Person in respect of a loan made to the Reporting Entity or any of its subsidiaries.
      Public disclosure of nature, content and details of any Related party transactions. Without delay. X     X   X  
      Listing Criteria
      9. Failure to meet the Eligibility Criteria as set out in App1. Disclosure to the DFSA of details of the criterion which the Issuer no longer meets or it is believed it not longer meets, together with grounds for the belief where appropriate. Without delay. X X X X X X X
      10. Change of full name and any other changes, including change of registered number or office, address, jurisdiction and constitution of the Issuer. Public disclosure of details of the change. Without delay. X X X X X X X
      Disclosures relating to Securities of the Issuer
      11. Any decision to declare, recommend or pay any dividend or to make any other distribution on the Securities. Public disclosure of the decision, including the rate and amount of and record date for the dividend or other distribution. Without delay and in any event no later than 5 days prior to the record date. X X X X X X X
      12. Any decision not to declare, recommend or pay any dividend which would otherwise have been expected to have been declared, recommended or paid in the normal course of events. Public disclosure of the decision together with grounds for the decision. Without delay and in any event at least 5 days prior to the date of distribution. X X X X X X X
      13. Disclosures required to be made under chapter 10, in relation to Connected Persons. Public disclosure of the details required by the prescribed form. Without delay on receiving a notification under chapter 10. X X X X X X X
      Financial Information
      14. Annual report, and annual financial statements. The annual report must be included which sets out in respect of the financial year to which it relates:
      (a) a review of operations during the year and the results of those operations;
      (b) details of any significant changes in the Reporting Entity's State of affairs during the financial year;
      (c) the Reporting Entity's principal activities during the year and any significant changes in the nature of those activities during the year;
      (d) details of any matter or circumstance that has arisen since the end of the year that has significantly affected or may significantly affect:
      (i) the Reporting Entity's operations in future financial years;
      (ii) the results of those operations in future financial years; or
      (iii) the Reporting Entity's State of affairs in future financial years; and
      (e) likely developments in the Reporting Entity's operations in future financial years and the expected results of those operations.
      The annual financial statements must be prepared by an independent, competent and qualified auditor in accordance with the International Financial Reporting Standards, or other reporting standards acceptable to the DFSA or where appropriate, AAOIFI standards.
      The annual financial statements must be independently audited in accordance with the standards published by IAASB or where appropriate, AAOIFI.
      A statement by the auditors that the accounts give a true and fair view of the State of the Reporting Entity's affairs, profit and loss and additional information as may be required.
      As soon as possible after the accounts have been approved but no later than 120 days after the end of the financial period. X X X X X X X
      15. Corporate Governance Code and the Annual report and accounts (Shares only). Disclosure to the shareholders of a statement of how the Issuer has applied the principles of the Corporate Governance Code, which provides an explanation which enables its Shareholders to evaluate how they have been applied. As soon as possible after the accounts have been approved but no later than 120 days after the end of the financial period. X     X      
      16. Preliminary financial results. Public disclosure of preliminary financial results. Without delay, but no later than 30 minutes before the market opens on the day after Board approval. X     X      
      17. Interim financial statements. An Issuer must publish a half yearly financial statement for the first six months of each financial year or period.

      If the figures have either been audited or reviewed by the auditors, comments to this effect should be included.
      Without delay and in any event no later than sixty days of the end of the period to which the statement relates. X     X   X X
      18. Change of accounting Reference Date. Public disclosure of previous and proposed accounting Reference Date, and reasons for the change. Without delay. X   X        
      19. Second interim financial report on change of accounting Reference Date. On a change of accounting Reference Date extending the new accounting period to more than 14 months a second interim report must be publicly disclosed and notified to the DFSA in respect of either:
      a) the period up to the old accounting reference date; or
      b) up to a period which is up to a date not more than six months prior to the new accounting Reference Date.
      Within four months of the period under review. X   X        
      Matters relating to the capital of the Issuer
      20. New issues of Securities. Public disclosure of the Class, number, date of issue, and consideration received for the issue of the Securities and the relevant details of the Issue in respect of share capital. Without delay. X   X X X X X
      21. Changes to the nature and rights attaching to Listed Securities or Securities into which they convert. Public disclosure of the Class of Securities to which the changes apply, the date on which the changes become effective, confirmation that consent of the holders of the Securities (and any other holders of Securities) has been obtained (and the date that such consent was obtained) and any other relevant details. Without delay. X   X X X X X
      22. Results of new issues. Public disclosure of confirmation of the results of the issue. Without delay. X   X X X X X
      Decisions submitted to and approved by holders of Securities
      23. Events requiring consent of holders of Securities under App4. Public disclosure of:
      (a) nature, details, contents and effect of the relevant event, activity or transaction;
      (b) any material change affecting any matter contained in an earlier disclosure.
      Without delay. X   X X X X X
      Other communications required under the Rules
      24. Any resolution passed by the Directors of the Issuer other than a resolution concerning ordinary business of the Issuer. Public disclosure of the resolution. Without delay. X     X      
      25. Any announcement, notice, document or communication required under the Rules. Public disclosure of the announcement, notice, document or communication. Without delay. X X X X X X X
      Insolvency/winding up
      26. Insolvency/winding up:
      (a) the presentation of any winding-up petition, the making of any winding up order or the appointment of an administrator, liquidator or the commencement of any proceedings under the Insolvency Law in respect of the Issuer, its Holding Company or any major Subsidiary; or
      (b) the passing of any resolution by the Issuer, its Holding Company or any major Subsidiary that it be wound up by way of members' or creditors' voluntary winding-up, or the occurrence of any event or termination of any period of time which would cause a winding-up.
      Public disclosure of the:
      (a) time and date of the presentation, order, appointment, resolution or other event;
      (b) identity of the petitioner or other Person at whose instigation the event occurs;
      (c) Court or tribunal responsible for making any order; or
      (d) administrator or liquidator appointed.
      Without delay. X X X X X X  
      Equivalent information and overseas listings
      27. An Issuer of Listed Securities that has the same Class of Securities:
      (a) listed on an Exchange outside the DIFC; or
      (b) which are subject to public disclosure under another jurisdiction's Securities regulator.
      Public disclosure. Without delay. X X X X X X X
      28. An Issuer of Listed Securities that has the same Class of Securities:
      (a) listed on an Exchange outside the DIFC; or
      (b) which are subject to public disclosure under another jurisdiction's Securities regulator,

      must disclose any suspension from listing or delisting of the Listed Securities.
      Public disclosure. Without delay. X   X X X X X
      29. Any change of the Issuer of Certificates representing Securities must be notified. Public disclosure. Without delay.       X X    
      30. Any change of custodian or depositary must be notified. Public disclosure. Without delay.       X X    

      OSR App 3 Guidance

      Price Sensitive Information

      1. This document provides Guidance on the interpretation of the continuing obligations relating to Price Sensitive Information.
      2. The DFSA recognises the importance to the market of accurate, up-to-date information about Reporting Entities. Reporting Entities are therefore required to disseminate unpublished Price Sensitive Information without delay as part of the "continuing obligations" of Reporting Entities under the Offered Securities Rules.
      3. A Reporting Entity must ensure that any Price Sensitive Information is given to the public as a whole and must take all reasonable care to ensure that such information is sufficiently detailed and not misleading, false or deceptive. The information must be released without delay and in the manner required by chapter 9 of the Offered Securities Rules.

      Identifying Price Sensitive information

      4. Price Sensitive Information is information which is liable to lead to substantial movement in the price of Listed Securities or (in the case of Debentures) to affect significantly the ability of the Issuer to meet its commitments. The Reporting Entity is itself best placed to determine whether information is liable to lead to substantial movement in the price of its Securities, as what constitutes Price Sensitive Information will vary widely according to circumstances.
      5. Reporting Entities must disclose Price Sensitive Information without delay. In practice, a short period before announcing Price Sensitive Information is permitted where a Reporting Entity is affected by an unexpected event and the Reporting Entity needs to clarify the situation so that any information released is accurate and not misleading. Where there is a danger of information leaking out in the meantime, the Reporting Entity should make a holding announcement giving an outline of the subject matter of the announcement, the reasons why a full announcement cannot yet be made and Undertaking to give a full announcement as soon as possible.

      Information which is not public knowledge

      6. The Offered Securities Rules require information to be disclosed to the public by way of an announcement made on the web-site of the Reporting Entity and by such other means as the DFSA may prescribe.
      7. Price Sensitive Information that is already available to the public, such as interest rate changes, does not need to be announced unless it has an unexpected or unusual effect on the Reporting Entity.
      8. The obligation to announce Price Sensitive Information is not discharged where a Fee must be paid for access to the information or it is not a matter of general knowledge that the information can be obtained. In cases of doubt a Reporting Entity should consult with the DFSA.

      Exemptions from the duty to disclose information

      9. Article 24 of the Markets Law provides exemptions to the requirement to provide disclosure of information where disclosure would be unduly detrimental to the interests of the Reporting Entity or where the information to be disclosed is commercially sensitive. Reporting Entities should ensure that any such information is kept confidential within the Reporting Entity. In these circumstances, the Reporting Entity should deliver without delay to the DFSA a notification requesting nondisclosure as set out in rule 9.3 of the Offered Securities Rules.

      Persons to whom Price Sensitive Information may be disclosed

      10. Under rule 9.2.3 of the Offered Securities Rules, a Reporting Entity may only give information that is Price Sensitive, in strict confidence, to its advisors, an agent employed to release the information, Persons with whom it is negotiating with a view to effecting a Transaction or raising finance or where the information is disclosed in the necessary course of business of the Reporting Entity. It is likely that Price Sensitive Information will be made known to certain Employees of the Reporting Entity. A Reporting Entity must put in place procedures to ensure that Employees do not disclose such information, whether or not inadvertently, and that Employees are adequately trained in the handling of Price Sensitive Information.

      Framework for the handling of Price Sensitive information

      11. Responsibility for a Reporting Entity's overall policy on the handling of Price Sensitive Information lies with the Directors of the Reporting Entity. Whilst responsibility for compliance with the continuing obligations set out in the Offered Securities Rules lies with the Reporting Entity, Directors should be aware that they may be held personally liable for breach of these rules. The enforcement procedures set out at chapter 12 of the Offered Securities Rules may be implemented against them.
      12. Reporting Entities should have a consistent procedure for assessing whether information is Price Sensitive and should clearly identify those within the Reporting Entity who are responsible for the communication of this information to the public.
      13. Reporting Entities should put in place arrangements for maintaining the confidentiality of Price Sensitive Information before announcement. This should include adequate training for Employees in the handling, distribution and announcement of Price Sensitive Information as appropriate. Reporting Entities should guard against the risk of Price Sensitive Information seeping into the public domain through leaked internal briefings or via trade journals for example. Where the Reporting Entity considers that this is likely to occur, an announcement should be made.

      Inadvertent disclosure on a selective basis

      14. In situations where the Reporting Entity will be open to questioning that may be designed to elicit or may have the effect of eliciting Price Sensitive Information (such as during shareholders' meetings or dealing with analysts or journalists), the Reporting Entity should plan in advance how it will respond to such questions. If the Reporting Entity intends to disclose Price Sensitive Information at such a meeting, an announcement must be made before or at the same time as the meeting.
      15. Where Price Sensitive Information is given to, for example, an analyst or journalist, it will have been disclosed on a selective basis and therefore the Reporting Entity will be in breach of its continuing obligation of disclosure. The Reporting Entity should ensure that a full announcement is made to the public as soon as it becomes aware of the inadvertent disclosure.

      Correction of inaccurate or misleading information

      16. Where a Reporting Entity has made a public announcement such as a profit forecast, and the Reporting Entity becomes aware that there is likely to be a material difference between the forecast and the true outcome, the Reporting Entity should make an announcement correcting the forecast as soon as possible.
      17. Reporting Entities whose Securities are listed in the same Class in more than one jurisdiction should ensure that the release of announcements containing Price Sensitive Information is co-ordinated across jurisdictions. If the requirements for disclosure are stricter in another jurisdiction than in the DIFC, the Reporting Entity must ensure that the same information is released in the DIFC as in that jurisdiction.
      18. Reporting Entities should not delay an announcement in the DIFC in order to wait for a market to open in another jurisdiction.

      OSR App 3 Part 2: Other Obligations

      Item Event Requirements Time Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      Equality of treatment of investors
      30. Treatment of investors. An Issuer of Shares must ensure equality of treatment in respect of all holders of Shares who are in the same position in respect of all rights attaching to them. At all times. X     X      
      31. Treatment of investors. An Issuer of Debt Instruments must ensure equality of treatment of all holders of Debt Instruments of the same Class in respect of all rights attaching to them. At all times.   X X   X    
      32. Reduction of capital. An Issuer may only purchase its own Shares or reduce its capital if:
      (a) the purchase or reduction does not materially prejudice the Issuer's ability to pay creditors;
      (b) it obtains the consent set out in App4; and
      (c) prior to the meeting seeking the consent referred to in (b) files with the DFSA the notice of meeting and any accompanying documents relating to the purchase or reduction of capital.
      At all times. X     X      
      33. Issue of Shares. An Issuer of Shares must provide pre-emption rights under which, on an issue of Shares for cash by it or by a Subsidiary, prior Shareholders are offered any Shares to be issued in proportion to their existing holdings prior to the Shares being offered to third parties, unless the specific issue of Shares without preemption rights is authorised by Shareholders by resolution. At all times. X     X      
      Communications with holders of Securities
      34. Any event in relation to which holders of Securities have voting or other rights. An Issuer must ensure that all the necessary facilities and information are available to enable holders of its Securities to exercise their rights.

      In particular it must:
      (a) inform holders of Securities of the holding of meetings which they are entitled to attend;
      (b) enable them to exercise their right to vote, where applicable;
      (c) eliminate any impediments to cross border voting; and
      (d) publish notices or distribute circulars giving information on the allocation and payment of dividends and interest, the issue of new Securities, including arrangements for the allotment, subscription, renunciation, conversion or Exchange of the Securities, and redemption or repayment of the Securities.
      At all times. X X X X X X X
      35. Any event in relation to which holders of bearer Securities have voting or other rights. If it is required to communicate with holders of bearer Securities, the Issuer must publish an advertisement/disseminate the communication in accordance with the requirements of the DFSA. At all times. X X X X X X X
      36. Notices of meetings in relation to Securities. A proxy form must be sent with the notice convening a meeting of holders of Securities to each Person entitled to vote at the meeting. At the same time as the sending of the notice. X X X X X X X
      37. Paying agency. An Issuer must have appointed a paying agent (which may be the Issuer itself). At all times. X   X X X X X
      Directors' Obligations
      38. Directors' key functions. The Directors must carry out the following key functions in relation to the Issuer:
      (a) Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major capital expenditures, acquisitions and divestitures;
      (b) Monitoring the effectiveness of the Issuer's governance practices and making changes as needed;
      (c) Monitoring and managing potential conflicts of interest of management, Board Members and shareholders, including misuse of corporate assets and abuse in Related party transactions;
      (d) Ensuring the integrity of the Issuer's accounting and financial reporting systems and that appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the law and relevant standards;
      (e) Overseeing the process of disclosure and communications.
      At all times. X   X X X X  
      39. Compliance with the Directors' Dealing Code. An Issuer must:
      (a) Require its Directors and any other persons subject to the application of the Directors' Dealing Code to comply with that Code;
      (b) Make all Directors and any persons subject to the application of the Directors' Dealing Code aware of their obligations under that Code, and regularly remind its Directors and those persons of their obligations; and
      (c) maintain written records, both of the request for clearance to deal and of the grant or refusal of such clearance.
      At all times. X X X X X X X

      OSR App 4 Consent of Holders of Securities

      OSR App 4 Part 1: Events Requiring Consent of Holders of Securities

      OSR App 4 A4.1.1

      A Reporting Entity must obtain the consent of the holders of the Securities as specified in the column headed "Threshold for Decision" before Undertaking the action referred to in the column headed "Event" in the table below.

      Item Event Threshold for
      decision
      Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      1. Alteration of the constitutional documents of the Issuer.

      Any alteration of the memorandum of association, articles of association, bye-laws or other Instrument constituting the Issuer.
      Majority. X     X   X  
      2. Alteration of Share capital.
      (a) Any alteration to the authorised Share capital of the Issuer; or
      (b) Any increase in the issued Share capital of the Issuer.
      Majority. X     X      
      3. Variation of Class rights.

      Any alteration of the rights of a Class of Securities.
      Majority of the Class varied and majority of any Class negatively affected. X X X X X X X
      4. Purchase of own Shares and approval or contract to purchase own Shares.
      (a) Purchases by an Issuer, or on its behalf, of its own Shares or of any other of its Securities.
      (b) Allotments of Shares to an Issuer (by virtue of it holding treasury shares) as part of a capitalisation or bonus issue and all sales, transfers out of treasury and cancellations of treasury Shares.
      75% X     X      
      5. Reduction of Share capital.

      Any reduction in the authorised or issued share capital of the Issuer.
      75% X     X   X  
      6. Giving of financial assistance to a Director.

      The giving of financial assistance:
      (a) by a Reporting Entity or any of its subsidiaries to a Connected Person, excluding the granting of financial assistance upon normal commercial terms in the ordinary and usual course of business but including the granting of financial assistance to a company in which the Reporting Entity or any of its subsidiaries and a Person who is a Connected Person otherwise than by reason only of his shareholding in the company in question are both shareholders, whether Reporting Entities, proportional share of the financial assistance is greater than its proportional equity interest in such company or, in the case of a guarantee, where the guarantee given by the Reporting Entity is a joint and several guarantee; or Majority.
      (b) by a Connected Person to a Reporting Entity or any of its subsidiaries, excluding the granting of financial assistance upon normal commercial terms or better which is received by the Reporting Entity or any of its subsidiaries in the ordinary and usual course of its business.
      Majority. X     X   X  
      7. Approval of Board members' service contracts over three years.

      Any entry of an Issuer into a service contract with a Board Member with a duration of over three years.
      Majority. X     X   X  
      8. Approval of any equity component of Directors' or Employees' compensation schemes. Majority. X     X      
      9. Giving Drectors authority to allot Shares.

      Any authorisation by the Issuer of the Board to allot Shares.
      Majority. X     X      
      10. Approval of substantial Property transactions.

      Any acquisition or realisation of assets (including Securities) by a Reporting Entity where:
      (a) the value of the assets being acquired or realised represents fifty per cent or more of the assets or consolidated assets, as the case may be, of the acquiring or realising group;
      (b) the net profit (after deducting all Charges except taxation and excluding extraordinary items) attributable to the assets being acquired or realised as disclosed in the latest published, audited accounts represents fifty per cent or more of such net profit of the acquiring or realising group;
      (c) the aggregate value of the consideration given or received represents fifty per cent or more of the assets or consolidated assets, as the case may be, of the acquiring or realising group; or
      (d) the value of the equity issued as consideration by the acquiring Issuer represents fifty per cent or more of the value of the equity previously in issue.
      Majority. X     X   X  
      11. Approval of Related party transactions.
      (a) the Issuer agreeing to acquire or dispose or acquiring or disposing (whether by a single Transaction or series of transactions) of assets to or from a Director or a substantial shareholder of the Issuer, or an Associate of either of them, where the amount involved is greater than [5] per cent of the book value of the existing net assets of the Group; or
      (b) the Issuer agreeing to acquire or dispose or acquiring or disposing (whether by a single Transaction or series of transactions) of an interest in a Company a substantial shareholder of which is a Director or substantial shareholder of the Issuer, or an Associate of either of them, where the amount involved is equal to or greater than [5] per cent of the net book value of the existing net assets of the Group;
      (c) Any series of transactions within a 12 month period which collectively fall or would fall within (a) or (b); or
      Provided that the following do not require approval:
      (d) the issue of new Securities for cash or pursuant to the exercise of conversion or subscription rights attaching to Securities where existing Shareholders have had the opportunity to subscribe for such Securities;
      (e) a sale of treasury Shares where existing Shareholders have had the opportunity to subscribe for such Securities; or
      (f) transactions made in accordance with an Employees' share scheme or long-term incentive scheme.
      Majority. X     X     X
      12. Disapplication of pre-emption rights on issue of Shares.

      The disapplication of pre-emption rights of Shareholders on an issue of Shares by the Issuer.
      Majority. X     X      
      13. Voluntary liquidation.

      The placing of the Issuer into voluntary liquidation.
      Majority. X           X

      OSR App 4 Part 2: Events Giving Rise to the Right of Holders of Securities to

      Item Event Threshold for
      decision
      Shares and Warrants over
      Shares
      Debentures and
      Warrants over
      Debentures
      Certificates Other Financial
      Products
      Government
      Securities
      Other Debt
      Instruments
      Shares Debentures Fund Other
      14. Right to removal/appointment of a Board Member. Majority. X     X      
      15. Removal of an auditor. Majority. X     X      

      OSR App 5 Corporate Governance and Directors' Dealings

      OSR A5.1 Reporting entity's obligations

      OSR A5.1.1

      (1) A Reporting Entity that issues Shares must take reasonable steps to ensure that it and its Directors comply with the requirements in part 1 of App5.
      (2) A Reporting Entity that deals in Securities must take reasonable steps to ensure that it, its Directors, Associates and Connected Persons comply with the requirements set out in part 2 of App5.

      OSR App 5 Part 1: Corporate governance code applying to reporting entities who issue shares

      The Board

      1. A Reporting Entity must be headed by an effective Board which must lead and control the Issue of Shares.
      2. There should be a clear division of responsibilities at the head of the Reporting Entity which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision.
      3. The Board should include a balance of executives and non-executives (including independent non-executives) such that no individual or small Group of individuals can dominate the board's decision taking. To achieve this, at least fifty per cent of Board Members must be non-executives. The Board must comprise of at least two independent Directors.
      An independent Director is a Director who can contribute objectively and significantly to the decision making of the Board free of any affiliation, conflict or influence from others.
      4. The Board should establish committees, each including at least one non-executive, independent Director, to deal with nomination and compensation of Directors. When committees of the Board are established, their mandate, composition and working procedures should be well defined and disclosed by the Board.
      5. The Board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties.
      6. There should be a formal and transparent procedure for the appointment of new Board Members to the Board.
      7. All Board Members should be required to submit themselves for re-election at regular intervals and at least every three years.
      8. Board Members should disclose to the Board whether they, directly, indirectly or on behalf of third parties, have a material interest in any Transaction or matter directly affecting the Reporting Entity.
      9. Board Members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the Reporting Entity and the shareholders. The Board should apply high ethical standards.
      10. Where Board decisions may affect different shareholder Groups differently, the Board should treat all shareholders fairly.
      11. Board Members should be able to commit themselves effectively to their responsibilities.

      Remuneration of Board members

      12. Levels of Remuneration of Board Members should be sufficient to attract and retain the Board Members needed to run the Reporting Entity successfully, but the Reporting Entity should avoid paying more than is necessary for this purpose. A proportion of executive Board members' Remuneration should be structured so as to link rewards to corporate and individual performance.
      13. The Reporting Entity must establish a formal and transparent procedure for developing policy on executive Remuneration and for fixing the Remuneration packages of individual Board Members. No Board Member should be involved in deciding his or her own Remuneration.
      14. The Reporting Entity's annual report must contain a statement of Remuneration policy and details of the Remuneration of each Board Member. Shareholders should have the opportunity to make their views on the policy known to the Board.

      Relations with shareholders

      15. Reporting Entities must be ready, where practicable, to enter into a dialogue with institutional shareholders based on the mutual understanding of objectives.
      16. Boards should use the AGM to communicate with private investors and encourage their participation. Shareholders should have the opportunity to ask questions of the Board, to place items on the agenda of general meetings and to propose resolutions (subject to reasonable limitations in the discretion of the board).
      17. Where shareholder votes are cast by custodians or nominees, the votes should be cast in a manner agreed upon with the Beneficial Owner of the Shares.
      18. Shareholders should be allowed to consult with each other on issues concerning their basic shareholder rights, subject to exceptions to prevent abuse.
      19. Minority shareholders should be protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly, and should have effective means of redress.

      Financial reporting and controls

      20. The Board should present a balanced and understandable assessment of the Reporting Entity's position and prospects.
      21. The Board should maintain a sound system of internal control to safeguard shareholders' Investment and the Reporting Entity's assets.
      22. The Board must establish an audit committee, comprised of a majority of independent Directors, at least one of which has financial expertise.

      Information disseminated to the public

      23. Channels for disseminating information to shareholders and to the public should provide for equal, timely and cost-efficient access to relevant information by users.
      24. The Reporting Entity's corporate governance framework should address and promote the provision of analysis or advice by analysts, brokers, rating agencies and others, that is relevant to decisions by investors, free from material conflicts of interest that might compromise the integrity of their analysis or advice.

      OSR App 5 Part 2: Directors' dealing code

      1. Prohibition of dealing on the basis of short term considerations

      A Director must not deal in any Securities of the Reporting Entity on considerations of a short term nature. A Director must take reasonable steps to prevent any dealings by or on behalf of any Associate in any Securities of the Reporting Entity on considerations of a short term nature.
      2. Dealing with Price Sensitive Information

      A Director must not deal in any Securities of the Reporting Entity at any time when he is in possession of Price Sensitive Information in relation to those Securities, or otherwise where clearance to deal is not given under this appendix.

      Where a Person may not deal in Securities under this paragraph, he also may not deal in any Derivatives of the Securities of the Reporting Entity.
      3. Clearance to deal

      No Director or Associate must deal in any Securities of the Reporting Entity (or deal in any Investment whose underlying substantially relates to, or whose Return is substantially determined by reference to, Securities of the Reporting Entity) without advising the chairman or one or more other Directors designated for this purpose in advance and receiving clearance. The chairman, or other designated Director, must advise the Board in advance at a Board meeting, or advise another designated Director, and receive clearance from the Board or designated Director, as appropriate.
      4. Circumstances for refusal

      A written record must be maintained by the Reporting Entity of the receipt of any advice received from a Director. Written confirmation from the Reporting Entity that such advice and clearance (if any) have been recorded must be given to and kept by the Director concerned.
      5. Dealings by Connected Persons and Investment managers

      A Director or Connected Person must (so far as is consistent with his duties of confidentiality to his Reporting Entity) seek to prohibit any dealing in Securities of the Reporting Entity or Investments covered by paragraph 2 at a time when the Director is in possession of unpublished Price Sensitive Information in relation to the relevant Securities and would be prohibited from dealing:
      (a) by or on behalf of any Person Connected with him or his Associate or relative; or
      (b) by an Investment Manager on his behalf or on behalf of any Associate where either he or his Associate has funds under management with that Investment Manager, whether or not discretionary.
      6. Duties of directors

      A Director must advise all Persons and Investment managers identified in paragraph 5 above:
      (a) of the name of the company or Reporting Entity of which he is a Director;
      (b) of any periods when the Director knows he is not himself free to deal in Securities of the Reporting Entity under the provisions of these Listing Rules unless his duty of confidentiality to the Reporting Entity prohibits him from disclosing such periods; and
      (c) that they must advise him immediately after they have dealt in Securities of the Reporting Entity or Related Investments.
      7. Special circumstances

      The grant of Options by the Board of Directors under an Employee share scheme to individuals who are not Directors may be permitted during a period in which the Director cannot deal if such grant could not reasonably be made at another time and failure to make the grant would indicate that the Reporting Entity was in a prohibited dealing period.

      The chairman or other designated Director may allow the exercise of an option or right under an employees' share scheme, or the conversion of a Convertible Security, where the final date for the exercise of such option or right, or conversion of such Security, falls during any period in which the Director cannot deal and the Director could not reasonably have been expected to exercise it at an earlier time when he was free to deal.

      Where an exercise or conversion is permitted, the chairman or other designated Director may not, however, give clearance for the sale of Securities acquired pursuant to such exercise or conversion.

      A Director may enter into a scheme under which Securities of the Reporting Entity:
      (a) are purchased pursuant to a regular standing order or direct debit arrangement; or
      (b) are acquired by way of a standing election to reinvest dividends or to other distributions received.
      8. Guidance on other dealings - activities subject to this appendix

      For the avoidance of doubt, subject to paragraph 9 the following constitute dealings for the purposes of this appendix and are consequently subject to its provisions:
      (a) dealings between Directors and/or Employees of the Reporting Entity;
      (b) off-market dealings; and
      (c) transfers for no consideration by a Director other than transfers where the Director retains an interest.
      9. Guidance on other dealings - activities not subject to this appendix

      Notwithstanding the definition of dealing in paragraph 8, the following dealings are not subject to the provisions of this appendix:
      (a) undertakings or elections to take up entitlements under a rights issue or other Offer (including an Offer of Shares in lieu of a cash dividend);
      (b) the take up of entitlements under a rights issue or other Offer (including an Offer of Shares in lieu of a cash dividend);
      (c) allowing entitlements to lapse under a rights issue or other Offer (including an Offer of Shares in lieu of a cash dividend);
      (d) the sale of sufficient entitlements nil-paid to allow take up of the balance of the entitlements under a rights issue;
      (e) undertakings to accept, or the acceptance of, a Takeover Offer under the DFSA Takeover Rules;
      (f) dealing by a Director with a Person whose interest in Securities is to be treated as the Director's interest including but not limited to Director's relatives;
      (g) the cancellation or surrender of an option under an employees' share scheme.

      OSR App 6 List of Exempt Offerors Pursuant to rule 2.4.3

      (1) Properly constituted governments, government agencies, central Banks or other national monetary authorities of the following countries or jurisdictions:
      (a) Canada, France, Germany, Italy, Japan, United Kingdom, United States, Russian Federation;
      (b) Organisation for Economic Co-operation and Development (OECD) Member countries;
      (c) Member countries of the Gulf Co-operation Council (GCC); or
      (d) Emirates of the United Arab Emirates.
      (2) Supranational organisations whose Members are either countries, central Banks or national monetary authorities of the countries or jurisdictions mentioned in (1).
      (3) The International Monetary Fund and the World Bank.
      (4) Any other country or jurisdiction that may be approved as an Exempt Offeror by the DFSA.

      OSR App 7 Offered Securities Rules and DFSA Fees

      Investment Offer Application Fee (prospectus filing Listing Application Fee Listing Annual Fee Offer Application Fee and Listing Application Fee for DIFC offers and DIFC Listings only
      Prospectus offers of Shares, Share Certificates and Share Warrants $20000 $20000 $10000 $30000
      Prospectus Offer Debentures, Debenture Certificates, Share Warrants $10000 $10000 $5000 $15000
      Prospectus offers of Funds $10000 $10000 $5000 $15000
      Exempt Offers of Securities $0 $10000 $5000 $15000

    • Annex D General (GEN)

      In this Annex, underlining indicates new text and striking through indicates deleted text.

      GEN 5 Management, Systems and Controls

      GEN 5.1 Application

      GEN 5.1.1

      (1) This chapter applies to every Authorised Firm Authorised Person with respect to the Financial Services carried on in or from the DIFC.
      (2) It also applies in a Prudential Context to a Domestic Firm with respect to all its activities whether they are carried on.
      (3) Section 5.3 also applies to an Authorised Firm in a Prudential Context with respect to its entire DIFC branch's activities wherever they are carried on.

      GEN 5.1.1 Guidance

      The purpose of this chapter is:

      a. to set out requirements for senior management within an Authorised Firm Authorised Person to take direct responsibility for their Authorised Firm Authorised Person's arrangements on matters likely to be of interest to the DFSA wherever they may give rise to risks to the DFSA's objectives or they affect the DFSA's functions under the legislation applicable in the DIFC; and
      b. to require an Authorised Firm to vest responsibility in senior management for effective and responsible organisation and to have effective system and controls.

      GEN 5.2 Senior management arrangements

      Apportionment of significant responsibilities

      GEN 5.2.1

      An Authorised Firm Authorised Person must apportion significant responsibilities among its senior management and maintain such a way that:

      (a) it is appropriate with regard to:
      (i) the business an affairs of the Authorised Firm Authorised Person; and
      (ii) he ability and qualifications of the responsible individuals;
      (b) it is clear who is responsible for which matters; and
      (c) the business and affairs of theAuthorised Firm Authorised Person can be adequately monitored and controlled by the Authorised Firm Authorised Person's Governing Body and senior management.

      GEN 5.2.2

      An Authorised Firm Authorised Person must allocate to the Senior Executive Officer or to the individual holding equivalent responsibility for the conduct for the Authorised Firm Authorised Person's business or the Governing Body, the functions of:

      (a) dealing with the apportionment of responsibilities; and
      (b) overseeing the establishment and maintenance of systems and controls.

      Recording of apportionment

      GEN 5.2.3

      (1) An Authorised Firm Authorised Person must establish and maintain an up-to-date record of the arrangements it has made to comply with Rules 5.2.1 and 5.2.2.
      (2) The record must show that the relevant senior management are aware of and have accepted the responsibilities apportioned in accordance with rule 5.2.1.
      (3) Where a responsibility has been allocated to more than one individual, the record must show clearly how that responsibility is allocated between the individuals.
      (4) The record must be retained for six years from the date on which it was established or superseded by a more up-to-date record.

      GEN 5.3 Systems and controls

      General requirement

      GEN 5.3.1

      (1) An Authorised Firm Authorised Person must establish and maintain systems and controls that ensure that its affairs are managed effectively and responsibly by its senior management.
      (2) An Authorised Firm Authorised Person must undertake regular reviews of its systems and controls.

      GEN 5.3.1 Guidance

      The nature and extent of the systems and controls of an Authorised Firm Authorised Person will depend upon a variety of factors including the nature, size and complexity of its business. While all Authorised Firm Authorised Persons, irrespective of size, legal structure or organisation need to comply with this chapter, the DFSA will take into account these factors and the differences that exist between Authorised Firm Authorised Persons when assessing the adequacy of an Authorised Firm Authorised Person's systems and controls. Nevertheless, neither these factors nor the differences relieve an Authorised Firm Authorised Person from compliance with its regulatory obligations.

      Organisation

      GEN 5.3.2

      An Authorised Firm Authorised Person must implement clear reporting lines that take into account the nature, scale and complexity of its business. These reporting lines, together with clear management responsibilities, must be communicated to all Employees and documented within the Authorised Firm Authorised Person.

      GEN 5.3.3

      An Authorised Firm Authorised Person must ensure that key duties and functions are segregated so as to avoid the situation where the allocation of duties and functions to be performed by the same individual could result in undetected errors or be vulnerable to abuse and thus expose the Authorised Firm Authorised Person or its customers or users to inappropriate risks.

      Risk management

      GEN 5.3.4

      An Authorised Firm Authorised Person must establish and maintain risk management systems and controls to enable it to identify, assess, mitigate, control and monitor its risks.

      GEN 5.3.5

      An Authorised Firm Authorised Person must develop, implement and maintain policies and procedures to manage the risks to which the Authorised Firm Authorised Person and where applicable, its customers or users, are exposed.

      GEN 5.3.6

      (1) An Authorised Firm Authorised Person must appoint an individual to advise its Governing Body and senior management of such risks.
      (2) An Authorised Firm Authorised Person which is part of a Group should be aware of the implications of any Group wide risk policy and systems and controls regime.

      Compliance

      GEN 5.3.7

      An Authorised Firm must establish and maintain compliance arrangements, including processes and procedures that ensure and evidence, as far as reasonably practicable, that the Authorised Firm complies with all legislation applicable in the DIFC.

      GEN 5.3.8

      An Authorised Firm must document the organisation, responsibilities and procedures of the compliance function.

      GEN 5.3.9

      An Authorised Firm must ensure that the Compliance Officer has access to sufficient resources, including an adequate number of competent staff, to perform his duties objectively and independently of operational and business functions.

      GEN 5.3.10

      An Authorised Firm must ensure that the Compliance Officer has unrestricted access to relevant records and to the Authorised Firm's Governing Body and senior management.

      GEN 5.3.11

      An Authorised Firm must establish and maintain monitoring and reporting processes and procedures to ensure that any compliance breaches are readily identified, reported and promptly acted upon.

      GEN 5.3.12

      An Authorised Firm must document the monitoring and reporting processes and procedures as well as keep records of breaches of any of legislation applicable in the DIFC.

      GEN 5.3.12 Guidance

      Similar requirements to those in Rules 5.3.7 to 5.3.12 are set out in AMI in relation to AMIs.

      Internal audit

      GEN 5.3.13

      (1) An Authorised Firm Authorised Person must establish and maintain an internal audit function with responsibility for monitoring the appropriateness and effectiveness of its systems and controls.
      (2) The internal audit function must be independent from operational and business functions.

      GEN 5.3.14

      An Authorised Firm Authorised Person must ensure that its internal audit function has unrestricted access to all relevant records and recourse when needed to the Authorised Firm Authorised Person's Governing Body or the relevant committee, established by its Governing Body for this purpose.

      GEN 5.3.15

      An Authorised Firm Authorised Person must document the organisation, responsibilities and procedures of the internal audit function.

      Business plan and strategy

      GEN 5.3.16

      (1) An Authorised Firm Authorised Person must produce a business plan which enables it, amongst other things, to manage the risks to which it and its customers are exposed.
      (2) The business plan must take into account the Authorised Firm Authorised Person's current business activities and the business activities forecast for the next twelve months.
      (3) The business plan must be documented and updated as appropriate to take account of changes in the business environment and to reflect changes in the business of the Authorised Firm Authorised Person.

      Management information

      GEN 5.3.17

      An Authorised Firm Authorised Person must establish and maintain arrangements to provide its Governing Body and senior management with the information necessary to organise and control its activities, to comply with legislation applicable in the DIFC and to manage risks. The information must be relevant, accurate, comprehensive, timely and reliable.

      Staff and agents

      GEN 5.3.18

      An Authorised Firm Authorised Person must establish and maintain systems and controls that enable it to satisfy itself of the suitability of anyone who acts for it.

      GEN 5.3.19

      (1) An Authorised Firm must ensure, as far as reasonably practical, that its staff are:
      (a) fit and proper;
      (b) appropriately trained for the duties they perform; and
      (c) trained in the requirements of the legislation applicable in the DIFC.
      (2) An Authorised Firm must establish and maintain systems and controls to comply with (1).

      GEN 5.3.19 Guidance

      When assessing the fitness and propriety of individuals, the Authorised Firm should satisfy itself that the conditions set out in AUT section A1.3 continue to apply as appropriate and should monitor conflicts or potential conflicts of interest arising from all of the individual's links and activities.

      Conduct

      GEN 5.3.20

      An Authorised Firm Authorised Person must establish and maintain systems and controls that ensure, as far as reasonably practical, that the Authorised Firm Authorised Person and its Employees do not engage in conduct, or facilitate others to engage in conduct, which may constitute:

      (a) market misconduct;
      (b) Money laundering; or
      (c) a financial crime under any applicable u.a.e. laws.

      Outsourcing

      GEN 5.3.1

      (1) An Authorised Firm Authorised Person which outsources any of its functions or activities directly Related to Financial Services to third party providers (including within its Group) is not relieved of its regulatory obligations and remains responsible for compliance with legislation applicable in the DIFC.
      (2) The outsourced function under this rule shall be deemed as being carried out by the Authorised Firm Authorised Person itself.
      (3) An Authorised Firm Authorised Person which uses such third party providers must ensure that it:
      (a) has undertaken due diligence in choosing suitable third party providers;
      (b) effectively supervises the outsourced functions or activities; and
      (c) deals effectively with any act or failure to act by the third party provider that leads, or might lead, to a breach of any legislation applicable in the DIFC.

      GEN 5.3.1 Guidance

      1. An Authorised Firm Authorised Person's outsourcing arrangements should include consideration of:
      a. applicable guiding principles for outsourcing in Financial Services issued by the Joint Forum; or
      b. any equivalent principles or regulations the Authorised Firm Authorised Person is subject to in its home country jurisdiction.
      2. As a minimum, the DFSA expects an Authorised Firm Authorised Person which has material outsourcing arrangements to:
      a. establish and maintain comprehensive outsourcing policies, contingency plans and outsourcing risk management programmes;
      b. enter into an appropriate and written outsourcing contract; and
      c. ensure that outsourcing arrangements neither reduce its ability to fulfil its obligations to customers and the DFSA, nor hinder the supervision by the DFSA.

      GEN 5.3.2

      An Authorised Firm Authorised Person must inform the DFSA about any material outsourcing arrangements.

      Business continuity and disaster recovery

      GEN 5.3.3

      (1) An Authorised Firm Authorised Person must have in place adequate arrangements to ensure that it can continue to function and meet its obligations under the legislation applicable in the DIFC in the event of an unforeseen interruption.
      (2) These arrangements must be kept up to date and regularly tested to ensure their effectiveness.

      GEN 5.3.3 Guidance

      1. In considering the adequacy of an Authorised Firm Authorised Person's business continuity arrangements, the DFSA will have regard to the Authorised Firm Authorised Person's management of the specific risks arising from interruptions to its business including its crisis management and disaster recovery plans.
      2. The DFSA expects an Authorised Firm Authorised Person to have:
      a. arrangements which establish and maintain the Authorised Firm Authorised Person's physical Security and protection for its information systems for business continuity purposes in the event of planned or unplanned information system interruption or other events that impact on its operations;
      b. considered its primary data centres' and business operations' reliance on infrastructure components, for example transportation, telecommunications networks and utilities and made the necessary arrangements to minimise the risk of interruption to its operations by arranging backup of infrastructure components and service providers; and
      c. considered, in its plans for dealing with a major interruption to its primary data centre or business operations, its alternative data centres' and business operations' reliance on infrastructure components and made the necessary arrangements such that these do not rely on the same infrastructure components and the same service provider as the primary data centres and operations.

      Complaints

      GEN 5.3.4

      An Authorised Firm Authorised Person must establish and maintain a register of Customer Complaints and their resolutions. Records of the complaints must be maintained for a minimum of six years.

      GEN 5.3.4 Guidance

      Depending on the nature, size and complexity of its business, it may be appropriate for an Authorised Firm Authorised Person to have a suitable complaint handling procedure in place in order to ensure that Customer Complaints are properly handled and that remedial action is taken promptly. Such complaint handling procedures would be expected to include provisions about the independence of staff investigating the complaint and bringing the matter to the attention of senior management.

      Records

      GEN 5.3.5

      (1) An Authorised Firm Authorised Person must make and retain records of matters and dealings, including accounting records which are the subject of requirements and standards under the legislation applicable in the DIFC.
      (2) Such records, however stored, must be capable of reproduction on paper within a reasonable period not exceeding three days.

      GEN 5.3.6

      Subject to rule 5.3.27, the records required by rule 5.3.25 or by any other rule in this Rulebook must be maintained by the Authorised Firm Authorised Person in the English language.

      GEN 5.3.7

      If an Authorised Firm Authorised Person's records relate to business carried on from an establishment in a territory outside the DIFC, an official language of that territory may be used instead of the English language as required by rule 5.3.26.

      GEN 5.3.8

      An Authorised Firm Authorised Person must have systems and controls to fulfil the Authorised Firm Authorised Person's legal and regulatory obligations with respect to adequacy, access, period of retention and Security of records.

      GEN 6 General Provisions

      GEN 6.1 Application

      GEN 6.1.1

      (1) Sections 6.1, 6.2, 6.3 and 6.2, 6.9 apply to every Person to whom any provision in the Rulebook applies.
      (2) Section 6.3 and 6.4 applyies to every Authorised Firm and Authorised Market Institution Person.
      (3) Sections 6.5 and 6.6 apply to every Authorised Firm, Authorised Market Institution and Person who has submitted an application for authorisation to carry on one or more Financial Services.
      (4) Section 6.7 applies to any Person who has been affected by the activities of the DFSA.
      (5) Section 6.8 applies to the DFSA.

      GEN 6.2 Interpreting the rulebook

      GEN 6.2 Guidance

      Interpretation

      1. Every provision in the Rulebook must be interpreted in the light of its purpose. The purpose of any provision is to be gathered first and foremost from the text of the provision in question and its context among other relevant provisions.
      2. When this section refers to a provision, this means every type of provision, including Rules and Guidance.
      3. Where reference is made in the Rulebook to another provision of the Rulebook or other DIFC legislation, it is a reference to that provision as amended from time to time.
      4. Unless the contrary intention appears:
      a. words in the Rulebook importing the masculine gender include the feminine gender and words importing the feminine gender include the masculine; and
      b. words in the Rulebook in the singular include the plural and words in the plural include the singular.
      5. If a provision in the Rulebook refers to a communication, notice, agreement, or other document 'in writing' then, unless the contrary intention appears, it means in legible form and capable of being reproduced on paper, irrespective of the medium used. Expressions Related to writing must be interpreted accordingly.
      6. Any reference to 'dollars' or '$' is a reference to United States Dollars unless the contrary intention appears.
      7. References to Articles made throughout the Rulebook are references to Articles in the Regulatory Law 2004 unless otherwise stated.
      8. Unless the contrary intention appears, a day or business day refers to:
      a. in relation to anything done or to be done in (including to be submitted to a place in) the u.a.e. any day which is not a Friday or Saturday or an official u.a.e. Bank holiday; and
      b. in relation to anything done or to be done by reference to a market outside the u.a.e. any day on which that market is normally open for business.

      Defined Terms

      9. Defined terms are identified throughout the Rulebook by the capitalisation of the initial letter of a word or of each word in a phrase and are defined in the Glossary (GLO). Unless the context otherwise requires, where capitalisation of the initial letter is not used, an expression has its natural meaning.

      GEN 6.3 Emergency

      GEN 6.3.1

      (1) If an Authorised Firm or Authorised Market Institution Person is unable to comply with a particular rule due to an emergency which is outside its or its Employees' control and could not have been avoided by taking all reasonable steps, the Authorised Firm or Authorised Market Institution Person will not be in contravention of that rule to the extent that, in consequence of the emergency, compliance with that rule is impractical.
      (2) This rule applies only for so long as the consequences of the emergency continue and the Authorised Firm or Authorised Market Institution Person is able demonstrate that it is taking all practical steps to deal with those consequences, to comply with the rule, and to mitigate losses and potential losses to its customers or users.
      (3) An Authorised Firm or Authorised Market Institution Person must notify the DFSA as soon as practical of the emergency and of the steps it is taking and proposes to take to deal with the consequences of the emergency.

      GEN 6.3.1 Guidance

      1. Procedures for notification to the DFSA are set out in SUP chapter 7.
      2. The Rules in section 6.3 do not affect the powers of the DFSA under Article 9 of the Markets Law 2004.

      GEN 6.4 Disclosure of regulatory status

      GEN 6.4.1

      An Authorised Firm or Authorised Market Institution Person must not misrepresent its status expressly or by implication.

      GEN 6.4.2

      (1) An Authorised Firm or Authorised Market Institution Person must take reasonable care to ensure that every key business document which is in connection with the Authorised Firm or Authorised Market Institution Person carrying on a Financial Service in or from the DIFC includes one of the disclosures under this rule.
      (2) A key business document includes letterhead whether issued by post, fax or electronic means, terms of business, Client agreements, written promotional materials, business cards, prospectuses and websites but does not include compliment slips, account statements or text messages.
      (3) The disclosure required under this rule is:
      (a) 'Regulated by the DIFC Financial Services Authority'; or
      (b) 'Regulated by the DFSA'.
      (4) The DFSA logo must not be reproduced without express written permission from the DFSA and in accordance with any conditions for use.

      GEN 6.5 Location of offices

      GEN 6.5.1

      (1) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services, is a Body Corporate incorporated under the Companies Law 2004, its head office and registered office must be in the DIFC.
      (2) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services, is a Partnership established under the Limited Liability Partnership Law 2004 or the General Partnership Law 2004, its head office must be in the DIFC.
      (3) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services is an unincorporated association formed within the jurisdiction of the DIFC, its head office must be in the DIFC.

      GEN 6.5.1 Guidance

      1. In considering the location of an Authorised Firm's or Authorised Market Institution's head office, the DFSA will have regard to the location of its Directors, partners and senior management and to the main location of its day-to-day operational, control, management and administrative arrangements and will judge matters on a case by case basis.
      2. Under the fit and proper test for Authorised Firms and the lLicensing rRequirements for Authorised Market Institutions, an Authorised Firm or Authorised Market Institution which does not satisfy the DFSA with respect to the location of its offices will, on this point alone not be considered fit and proper or able to satisfy the Licensing Requirements.

      GEN 6.6 Close links

      GEN 6.6.1

      (1) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services has Close Links with another Person, the DFSA must be satisfied that those Close Links are not likely to prevent the effective supervision by the DFSA of the Authorised Firm or Authorised Market Institution Person.
      (2) If requested by the DFSA the Authorised Firm and Authorised Market Institution Person must submit a Close Links report or notification, in a form specified by the DFSA. This may be requested on an ad hoc or periodic basis.

      GEN 6.6.1 Guidance

      1. Procedures for notification to the DFSA are set out in SUP chapter 7.
      2. Under the fit and proper test for Authorised Firms and the lLicensing rRequirements for Authorised Market Institutions, an Authorised Firm or Authorised Market Institution which does not satisfy the DFSA with respect of its Close Links will, on this point alone, not be considered fit and proper or able to satisfy the Licensing Requirements.

      GEN 6.7 Complaints against the DFSA

      GEN 6.7 Guidance

      1. A Person who feels he has been adversely affected by the manner in which the DFSA has carried out its functions may make a complaint to the DFSA about its conduct or the conduct of its Employees.
      2. A complaint must be in writing and should be addressed to the Chief Executive of the DFSA. The complaint will be dealt with by the DFSA in a timely manner.

      GEN 6.8 Public register

      Maintenance and publication

      GEN 6.8.1

      The registers required to be maintained and published by the DFSA pursuant to Article 62 shall be published and maintained in either or both of the following manners:

      (a) by maintaining hard copy registers which are made available for inspection at the premises of the DFSA during normal business hours; or
      (b) by maintaining an electronic version of the registers and making the information from those registers available through the DFSA website.

      GEN 6.9 Communication with the DFSA

      GEN 6.9.1

      An Authorised Firm Person or Recognised Person must ensure that any communication with the DFSA is conducted in the English language.

      GEN 7 Fees

      GEN 7.1 Application

      GEN 7.1.1

      This chapter applies to every:

      (a) Authorised Firm, Authorised Market Institution Person and applicant for a Licence;
      (b) applicant for Recognition as a Recognised Body;
      (c) Recognised Body;
      (bd) applicant for registration as an auditor with the DFSA; and
      (ce) auditor registered with the DFSA.

      GEN 7.2 General provisions

      GEN 7.2.1

      Where a Fee is payable for any application to the DFSA, the application will not be regarded as submitted until the Fee and any supplementary Fee has been paid in full.

      GEN 7.2.2

      Where an annual Fee or supplementary Fee in relation to ongoing supervision is due from any Person under a provision of these Rules, the Person must pay it by the date on which it becomes due. If he fails to do so then, without limiting the right of the DFSA to take any other action, the sum due shall be increased by 1% for each calendar month, or part of a calendar month, that it remains outstanding beyond the due date.

      GEN 7.2.2 Guidance

      If a Fee is not paid by the date on which it becomes due, the Person is in breach of a rule and the DFSA is entitled to take action including, but not limited to, taking steps to withdraw authorisation to conduct one or more Financial Services.

      GEN 7.2.3

      The DFSA may reduce, waive or refund all or part of any Fee if it considers that, in the exceptional circumstances of a particular case, it would be equitable to do so.

      GEN 7.2.4

      (1) The DFSA may require a Person to pay to the DFSA a supplementary Fee in circumstances where it expects to incur substantial additional costs in dealing with an application or conducting ongoing supervision.
      (2) In such cases the DFSA will notify the Person as soon as reasonably possible of the amount of the supplementary Fee.

      GEN 7.2.4 Guidance

      1. A supplementary Fee may be levied by the DFSA because it expects that certain applications will require more intensive scrutiny than others. An example is where the entity is a Branch from a jurisdiction where there are not or are not expected to be in place arrangements for co-operation between the DFSA and the relevant Regulators in that jurisdiction. Equally, where the entity is incorporated in the DIFC, a full analysis of the prudential and systems arrangements will be required.
      2. A supplementary Fee may also be levied by the DFSA in cases where the ongoing supervision of the Authorised Firm or Authorised Market Institution Person appears to the DFSA to be likely to cause it to incur substantial additional costs.

      GEN 7.3 Application fees

      GEN 7.3.1

      The following Persons:

      (a) an applicant for a Licence; and
      (b) an Authorised Firm or Authorised Market Institution Person applying for authorisation to carry on an additional Financial Service,
      must pay to the DFSA:
      (c) the applicable Fee specified in section A5.2 or A5.3 as appropriate; and
      (d) any supplementary Fee required by the DFSA.

      GEN 7.3.2

      An applicant for registration as an auditor with the DFSA must pay to the DFSA the applicable Fee specified in App6.

      GEN 7.3.3

      An applicant for Recognition as a Recognised Body must pay to the DFSA the applicable Fee specification in App 7.

      -para;

      GEN 7.4 Annual fees

      GEN 7.4.1

      An Authorised Firm or Authorised Market Institution Person must pay to the DFSA:

      (a) the applicable Fee specified in section A5.4; and
      (b) any supplementary Fee required by the DFSA.

      GEN 7.4.2

      An auditor registered with the DFSA must pay to the DFSA the applicable Fee specified in App6.

      GEN 7.4.3

      (1) The initial annual Fee must be paid in full to the DFSA within 21 days of the date on which the Licence or registration is granted.
      (2) Subsequent annual Fees must be paid in full to the DFSA on or before 1 January of any calendar year.

      GEN 7.4.3 Guidance

      In regard to the payment of an annual Fee on or before 1 January, invoices will be issued at least 21 days before that date.

      GEN 8. Accounting and Auditing

      GEN 8.1 Application

      GEN 8.1.1

      This chapter applies to every:

      (a) Authorised Firm Authorised Person;
      (b) applicant for registration as an auditor with the DFSA; and
      (c) auditor registered with the DFSA.

      GEN 8.2 Accounting standards

      GEN 8.2.1

      (1) An Authorised Firm Authorised Person must prepare and maintain all financial accounts and statements in accordance with the International Financial Reporting Standards (IFRS) unless (2) or (3) applies.
      (2) If an Authorised Firm Authorised Person is an Islamic Financial Institution it must prepare and maintain all financial accounts and statements in accordance with the accounting standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
      (3) If an Authorised Firm Authorised Person operates an Islamic Window it must prepare and maintain all financial accounts and statements in accordance with the IFRS, as supplemented by AAOIFI FAS 18 in respect of its Islamic Financial Business.

      GEN 8.2.1 Guidance

      1. AAOIFI FAS 18 sets out the accounting rules for recognising, measuring and presenting the assets managed and funds mobilised on the basis of Islamic Shari'a rules and principles in the financial accounts and statements of conventional Financial Institutions that Offer Islamic Financial Services, as well as the income generated from these services. The standard also determines the necessary disclosures Related to these services.
      2. Under AAOIFI FAS 18,Authorised Firm Authorised Persons which operate Islamic Windows must disclose (in their relevant financial statements) the following:
      a. whether or not they co-mingle funds Related to Islamic Financial Business with funds relating to conventional financial business;
      b. the sources and applications of funds mobilised and invested through their Islamic Financial Business and the sources of funds used to cover a deficit if it occurs;
      c. any reserves of expenditures prohibited by Shari'a and the disposition of any revenues, the latter shall be determined by the Shari'a Supervisory Board;
      d. any reserves deducted from the funds mobilised according to Shari'a, the purpose of such reserves and to whom the reserves shall revert in the case where the activities in respect of which the reserves were deducted have ceased; and
      e. the percentage amount of funds relating to Islamic Financial Business in comparison with the percentage amount of funds relating to conventional financial business.

      GEN 8.3 Accounting records and regulatory returns

      GEN 8.3.1

      Every Authorised Firm Authorised Person must keep accounting records which are sufficient to show and explain transactions and are such as to:

      (a) be capable of disclosing the financial position of the Authorised Firm Authorised Person on an ongoing basis; and
      (b) record the financial position of the Authorised Firm Authorised Person as at its financial year end.

      GEN 8.3.2

      Accounting records must be maintained by an Authorised Firm Authorised Person such as to enable its Governing Body to ensure that any accounts prepared by the Authorised Firm Authorised Person comply with the legislation applicable in the DIFC.

      GEN 8.3.3

      An Authorised Firm Authorised Person's accounting records must be:

      (a) retained by the Authorised Firm Authorised Person for at least ten years from the date to which they relate;
      (b) at all reasonable times, open to inspection by the DFSA or the auditor of the Authorised Firm Authorised Person; and
      (c) if requested by the DFSA capable of reproduction, within a reasonable period not exceeding three days, in hard copy and in English.

      GEN 8.3.4

      All regulatory returns prepared by the Authorised Firm must be prepared and submitted in accordance with the requirements set out in PIB appendix 7 or PIN chapter 6 as applicable.

      Changes to the financial year end

      GEN 8.3.5

      (1) If an Authorised Firm is a Domestic Firm and intends to change its financial year end, it must obtain the DFSA's prior consent before implementing the change.
      (2) The application for consent must include reasons for the change.
      (3) The DFSA may require the Authorised Firm to obtain written confirmation from its auditor that the change of financial year end would not result in any significant distortion of the financial position of the Authorised Firm.

      GEN 8.3.6

      If an Authorised Firm is not a Domestic Firm and intends to change its financial year, it must provide the DFSA with reasonable advance notice prior to the change taking effect.

      GEN 8.4 Appointment and termination of auditors

      GEN 8.4.1

      An Authorised Firm Authorised Person must:

      (a) notify the DFSA of the appointment of an auditor, including the name and business address of the auditor and the date of the commencement of the appointment;
      (b) prior to the appointment of the auditor, take reasonable steps to ensure that the auditor has the required skills, resources and experience to audit the business of the Authorised Firm Authorised Person for which the auditor has been appointed; and
      (c) if it is a Domestic Firm, ensure that the auditor, at the time of appointment and for the duration of the engagement as auditor, is registered with the DFSA.

      GEN 8.4.2

      An Authorised Firm Authorised Person must notify the DFSA immediately if the appointment of the auditor is or is about to be terminated, or on the resignation of its auditor, giving the reasons for the cessation of the appointment.

      GEN 8.4.3

      An Authorised Firm Authorised Person must appoint an auditor to fill any vacancy in the office of auditor and ensure that the replacement auditor can take up office at the time the vacancy arises or as soon as reasonably practicable.

      GEN 8.4.4

      (1) An Authorised Firm Authorised Person must take reasonable steps to ensure that the relevant audit staff of the auditor are independent of and not subject to any conflict of interest with respect to the Authorised Firm Authorised Person.
      (2) An Authorised Firm Authorised Person must notify the DFSA if it becomes aware, or has reason to believe, that the relevant audit staff of the auditor are no longer independent of the Authorised Firm Authorised Person, or have a conflict of interest which may affect their judgement in respect of the Authorised Firm Authorised Person.

      GEN 8.4.4 Guidance

      1. The relevant staff of an auditor are independent if their appointment or retention by an Authorised Firm Authorised Person is not contrary to any applicable ethical Guidance issued by the professional supervisory body.
      2. An Authorised Firm Authorised Person should consider rotating the appointed relevant staff of the auditor every five years to ensure that the relevant staff of the auditor remains independent.

      GEN 8.4.5

      If requested by the DFSA, an Authorised Firm Authorised Person which carries on Financial Services through a Branch must provide the DFSA with information on its appointed or proposed auditor with regard to the auditor's, skills, experience and independence.

      GEN 8.4.6

      Where an auditor appointed by an Authorised Firm Authorised Person is not suitable in the opinion of the DFSA, or where an auditor has not been appointed, the DFSA may direct an Authorised Firm Authorised Person to replace or appoint an auditor in accordance with the requirements in this chapter.

      GEN 8.5 Co-operation with auditors

      GEN 8.5.1

      An Authorised Firm Authorised Person must take reasonable steps to ensure that it and its Employees:

      (a) provide such assistance as the auditor reasonably requires to discharge its duties;
      (b) give the auditor right of access at all reasonable times to relevant records and information;
      (c) do not interfere with the auditor's ability to discharge its duties;
      (d) do not provide false or misleading information to the auditor; and
      (e) report to the auditor any matter which may significantly affect the financial position of the Authorised Firm Authorised Person.

      GEN 8.6 Function of the auditor

      GEN 8.6.1

      An Authorised Firm or Authorised Market Institution, as applicable, must in writing require its auditor to:

      (a) conduct an audit of the Authorised Firm Authorised Person's accounts in accordance with the requirements of the relevant standards published by the International Auditing and Assurance Standards Board (IAASB) in respect of conventional financial business and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) in respect of any Islamic Financial Business undertaken;
      (b) produce a report on the audited accounts which states:
      (i) whether, in the auditor's opinion, the accounts have been properly prepared in accordance with the requirements imposed by this chapter;
      (ii) in particular, whether the accounts give a true and fair view of the financial position of the Authorised Firm Authorised Person for the financial year and of the State of the Authorised Firm Authorised Person's affairs at the end of the financial year end; and
      (iii) any other matter or opinion relating to the requirements of this chapter;
      (c) produce an Auditor's Annual Report which states whether:
      (i) the auditor has audited the Authorised Firm Authorised Person's annual financial statements in accordance with the IAASB or AAOIFI in respect of Islamic Financial Business;
      (ii) the auditor has carried out any other procedures considered necessary, having regard to the IAASB and to AAOIFI auditing standards in respect of Islamic Financial Business;
      (iii) the auditor has received all necessary information and explanations for the purposes of preparing this report to the DFSA;
      (iv) (in the case of an Authorised Firm) in the auditor's opinion, the regulatory returns specified by the applicable Rules in PIN or PIB have been properly prepared by the Authorised Firm and provide a true and fair representation of the financial position of the Authorised Firm, as at the date of the Authorised Firm's financial year end;
      (v) in the auditor's opinion, the Authorised Firm Authorised Person's regulatory returns to the DFSA have been properly reconciled with the appropriate audited accounts;
      (vi) (in the case of an Authorised Firm) in the auditor's opinion, that an Authorised Firm which is subject to an expenditure based requirement has calculated the expenditure based requirement in accordance with the Rules;
      (vii) in the auditor's opinion, the Authorised Firm Authorised Person's financial resources as at its financial year end have been properly calculated in accordance with the Rules and are sufficient to meet the relevant prudential requirements or minimum financial resources requirement; and
      (viii) in the auditor's opinion, the Authorised Firm Authorised Person has kept proper accounting records, in compliance with the applicable Rules in PIN or PIB;
      (d) produce, if the Authorised Firm controls or holds Client Money, a Client Money Auditor's Report which states whether, in the opinion of the auditor:
      (i) the Authorised Firm has maintained throughout the year systems and controls to enable it to comply with the relevant provisions of COB chapter 9 and, if applicable, COB App5;
      (ii) the Authorised Firm's controls are such as to ensure that Client Money is identifiable and secure at all times;
      (iii) any of the requirements in COB chapter 9 and the Client Money Provisions have not been met;
      (iv) if applicable, Client Money belonging to Segregated Clients has been segregated in accordance with the Client Money Provisions;
      (v) if applicable, the Authorised Firm was holding and controlling an appropriate amount of Client Money in accordance with COB chapter 9 and with the Client Money Provisions as at the date on which the Authorised Firm's audited balance sheet was prepared; and
      (vi) if applicable, there have been any material discrepancies in the reconciliation of Client Money;
      (e) produce, if the Authorised Firm controls or holds Insurance Monies, an Insurance Monies Auditor's Report which states whether, in the opinion of the auditor:
      (i) the Authorised Firm has maintained throughout the year systems and controls to enable it to comply with the relevant provisions of COB chapter 14;
      (ii) the Authorised Firm's controls are such as to ensure that Insurance Monies are identifiable and secure at all times;
      (iii) any of the requirements in COB chapter 14 have not been met;
      (iv) if applicable, the Authorised Firm was holding and controlling an appropriate amount of Insurance Monies in accordance with COB chapter 14 as at the date on which the Authorised Firm's audited balance sheet was prepared; and
      (v) if applicable, there have been any material discrepancies in the reconciliation of Insurance Monies;
      (f) produce, if the Authorised Firm Provides Custody in or from the DIFC, a Safe Custody Auditor's Report in respect of such business which states whether, in the opinion of the auditor:
      (i) the Authorised Firm has, throughout the year, maintained systems and controls to enable it to comply with the Safe Custody Provisions in COB App6;
      (ii) the Safe Custody Investments are registered, recorded or held in accordance with the Safe Custody Provisions;
      (iii) there have been any material discrepancies in the reconciliation of Safe Custody Investments; and
      (iv) any of the requirements of the Safe Custody Provisions have not been met;
      (g) submit the reports produced pursuant to Rules 8.6.1(b)-8.6.1(f) above to the Authorised Firm Authorised Person; and
      (h) notify the DFSA in writing if he resigns due to significant concerns which have previously been raised with senior management of the Authorised Firm Authorised Person and which have not been addressed.

      GEN 8.6.2

      An Authorised Firm Authorised Person must submit any auditor's reports and financial statements required by this chapter to the DFSA within four months of the Authorised Firm Authorised Person's financial year end.

      GEN 8.6.3

      If requested, an Authorised Firm Authorised Person must provide to any Person a copy of its most recent audited accounts, together with the auditor's report referred to in rule 8.6.1(b). If the copy is made available in printed form, the Authorised Firm Authorised Person may make a Charge to cover reasonable costs incurred in providing the copy.

      GEN 8.7 Auditor registration and qualification

      GEN 8.7.1

      An auditor applying for registration must use the appropriate form in PFN, supported by such additional material as may be required by the DFSA and pay the prescribed Fee in App6.

      GEN 8.7.2

      Before the DFSA grants registration as an auditor, an applicant must satisfy the DFSA that it: (a) is fit and proper to be registered as an auditor taking into account the applicant's: (i) background and history; (ii) ownership and Group; and (iii) resources; (b) has adequate professional indemnity insurance which provides cover in respect of work undertaken in the DIFC; and (c) meets any other requirements prescribed by the DFSA.

      GEN 8.7.3

      An auditor must pay the annual Fee prescribed in App6 to remain registered as an auditor.

      GEN 8.7.4

      (1) An auditor must file with the DFSA:
      (a) at the time of filing an application for registration; and
      (b) at the time of payment of the annual Fee or by such later time that the DFSA may direct;
      an assessment completed within the preceding three months by an independent body and addressing such matters relating to the auditor as notified by the DFSA.
      (2) If upon receiving an annual assessment the DFSA forms the view that the auditor is no longer fit and proper to be on the register of auditors, the DFSA may cancel the registration of the auditor.
      (3) The auditor must pay for the services of the independent body in (1).

      GEN 8.7.5

      If, at any time after registration, an auditor no longer meets the requirements for registration as an auditor, the auditor must immediately inform the DFSA in writing.

      GEN 8.8 Register of auditors

      GEN 8.8.1

      The DFSA will maintain the register of auditors by recording the following information in respect of current and former registered auditors:

      (a) full name;
      (b) address;
      (c) date of registration as auditor with the DFSA; and
      (d) date of cessation of registration as auditor.

      GEN App 6 Fees

      GEN A6.1 Fees table for in relation to auditors

      GEN A6.1.1

      A6.1.1

      The Fees table in relation to auditors.

      Upon receipt by the DFSA of:  
      Application for registration of auditor $5,000
      Annual Fee for registration as an auditor $2,000

      GEN App 7 Fees

      GEN A7.1 Fees table

      A7.1 Fees

      GEN A7.1.1

      The Fees table in relation to applicants for Recognition as Recognised Bodies.

      Upon receipt by the DFSA of:  
      Application for Recognition as a Recognised Body $10,000

      Annex E Supervision (SUP)

      In this Annex, underlining indicates new text and striking through indicates deleted text.

      GEN 2 Information Gathering

      GEN 2.1 Application

      GEN 2.1.1

      This chapter applies to an Authorised Firm Authorised Person with respect to the carrying on of all of its activities and takes into account any activities of other Members of the Group of which the Authorised Firm Authorised Person is a Member.

      GEN 2.2 Information and documents

      GEN 2.2 Guidance

      1. In order to supervise the conduct and activities of Authorised Firm Authorised Persons and Authorised Individuals the DFSA needs to have access to a broad range of information about an Authorised Firm Authorised Person's business.
      2. The power for the DFSA to obtain information and require an Authorised Firm Authorised Person to produce information and documents is provided under Article 73.
      3. The DFSA will provide Authorised Firm Authorised Persons with written notice of the documents and information that are required.
      4. The Regulatory Law 2004 allows the DFSA to make a request for information and documents from an Authorised Firm Authorised Person wherever that Authorised Firm Authorised Person may be located. This allows the DFSA access to the head office of a Branch or Subsidiary and the provision of documents from its head office.
      5. Article 73(4) allows the DFSA, on application to the Court, to exercise these rights outside the jurisdiction of the DIFC in relation to a Person other than an Authorised Firm Authorised Person and require such a Person to comply with the requirement or permit the exercise of the DFSA's rights.

      GEN 2.2.1

      An Authorised Firm Authorised Person must where reasonable:

      (a) give or procure the giving of specified information, documents, files, tapes, computer data or other material in the Authorised Firm Authorised Person's possession or control to the DFSA;
      (b) make its Employees, readily available for meetings with the DFSA;
      (c) give the DFSA access to any information, documents, records, files, tapes, computer data or systems, which are within the Authorised Firm Authorised Person's possession or control and provide any facilities to the DFSA;
      (d) permit the DFSA to copy documents or other material on the premises of the Authorised Firm Authorised Person at the its DFSA's reasonable expense and to remove copies and hold them elsewhere or;
      (e) to provide any copies as requested by the DFSA; and
      (f) answer truthfully, fully and promptly, all questions which are put to it by the DFSA.

      GEN 2.2.2

      An Authorised Firm Authorised Person must take reasonable steps to ensure that its Employees act in the manner set out in this chapter.

      GEN 2.2.3

      An Authorised Firm Authorised Person must take reasonable steps to ascertain if there is any secrecy or data protection legislation that would restrict access to any data by the Authorised Firm Authorised Person or the DFSA. Where such legislation exists, the Authorised Firm Authorised Person must keep copies of relevant documents or material in a jurisdiction which does allow access in accordance with legislation applicable in the DIFC.

      GEN 2.3 Access to premises

      GEN 2.3 Guidance

      1. Under Article 73, the DFSA may enter the premises of any Authorised Firm Authorised Person during normal business hours or at any other time as may be agreed, for the purpose of inspecting and copying information or documents stored in any form on such premises, as it considers necessary or desirable to meet the objectives of the DFSA.
      2. The DFSA expects to be able to give reasonable notice to an Authorised Firm Authorised Person or Person when it seeks information, documents, meetings or access to premises. On rare occasions however, the DFSA may seek access to premises without notice. The prospect of unannounced visits is intended to encourage Authorised Firm Authorised Persons to comply with the legislation applicable in the DIFC.
      3. Pursuant to Articles 67 and 72 (2), Authorised Firm Authorised Persons are required to give full co-operation and respond to any regulatory request.

      GEN 2.4 Third party providers and supliers

      GEN 2.4.1

      An Authorised Firm Authorised Person must ensure that the terms of its contract with each third party provider or supplier under a material outsourcing arrangement requires the third party to:

      (a) provide for the provision of information under this chapter in relation to the Authorised Firm Authorised Person and access to their business premises; and
      (b) deal in an open and co-operative way with the DFSA.

      GEN 2.4.1 Guidance

      1. The DFSA will normally seek information from an Authorised Firm Authorised Person in the first instance, but reserves the right to seek it from supplier under a material outsourcing arrangement if appropriate.
      2. A material outsourcing arrangement would be a service of such importance that weakness, or failure of the service would cast serious doubt on the Authorised Firm Authorised Person's continuing ability to remain fit and proper or comply with applicable laws including Rules.
      3. GEN rule 5.3.22 requires an Authorised Firm Authorised Person to inform the DFSA about any material outsourcing arrangements.
      4. The Regulatory Law 2004 requires co-operation and disclosure by an Authorised Firm Authorised Person's auditor and may involve the DFSA meeting or requesting documents or information from the Authorised Firm Authorised Person's auditors.

      GEN 2.5 Lead regulation

      GEN 2.5.1

      (1) If requested by the DFSA, an Authorised Firm Authorised Person must provide the DFSA with information that the Authorised Firm Authorised Person or its auditor has provided to a Financial Services Regulator.
      (2) If requested by the DFSA, an Authorised Firm Authorised Person must take reasonable steps to provide the DFSA with information that other Members of the Authorised Firm Authorised Person's Group has provided to a Financial Services Regulator.

      GEN 2.5.1 Guidance

      1. Under Article 39 the DFSA may exercise its powers for the purpose of assisting other Regulators or agencies.
      2. The DFSA may also delegate functions and powers to representatives of other Regulators or agencies as prescribed in Article 40.

      GEN 3. Waivers

      GEN 3.1 Application

      GEN 3.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      GEN 3.1.1 Guidance

      1. Under Article 25, the DFSA may by means of a written notice provide that one or more provisions of the Rules either:
      a. shall not apply in relation to a particular person; or
      b.shall apply to a particular Person with such modifications as a reset out in the written notice.
      2. This chapter sets out Rules in connection with the provision of a written notice under Article 25 including Rules prescribing procedures for the making of applications and providing of consents.
      3. It is unlikely that the DFSA will waive the following Rules:
      a. Rules in GEN chapters 2 and 3; or
      b. Rules in COB part 1.

      GEN 3.1.2

      Throughout the Rulebook reference to the written notice under Article 25 will be referred to as a 'waiver'.

      GEN 3.2 Procedures for application for waivers

      GEN 3.2 Guidance

      A wWaiver application forms are is contained in PFN.

      Application by an Authorized Firm

      GEN 3.2.1

      If an Authorised Firm wishes to apply for a waiver, it must apply in writing and the application must be delivered to the DFSA as outlined insection 7.10. 11

      GEN 3.2.2

      The application must contain:

      (a) the name and Licence number of the Authorised Firm Authorised Person;
      (b) the rule to which the application relates;
      (c) a clear explanation of the waiver that is being applied for and the reason why the Authorised Firm Authorised Person is requesting the waiver;
      (d) details of any other requirements; for example, if there is aspecific period for which the wavier is required;
      (e) if the Authorised Firm Authorised Person has any reason why the waiver should not be published or why it should be published without disclosing the identity of the Authorised Firm Authorised Person; and
      (f) all relevant facts to support the application.

      GEN 3.2.3

      An Authorised Firm Authorised Person must immediately notify the DFSA if it becomes aware of any material change in circumstances which may affect the application for a waiver.

      Determination of waivers

      GEN 3.2.3 Guidance

      1. The DFSA will acknowledge an application for a waiver and may request further information. The time taken to determine the application for a waiver will depend upon the issues it raises.
      2. The determination of a waiver is at the discretion of the DFSA and it will generally only apply a waiver where there is shown to be an appropriate and justifiable reason.
      3. The DFSA may impose conditions on a waiver, for example additional reporting requirements
      4. A waiver may be given for a specified period of time only, after which time it will cease to apply.
      5. If the DFSA decides not to give a waiver, it will give reasons for the decision.
      6. An Authorised Firm Authorised Person may withdraw its application for a waiver at any time up until the giving of the waiver. In doingso, an Authorised Person should give reasons for the withdrawing of the application.

      General waivers

      7. Where the DFSA considers that a waiver should apply to a number of Authorised Firm Authorised Persons, for example, where a rule unmodified may not meet the particular circumstances of a particular Category of Authorised Firm Authorised Person the DFSA will inform the Authorised Firm Authorised Persons concerned that the waiver is available, either by contacting Authorised Firm Authorised Persons individually or by publishing details of the availability of the waiver on the DFSA's website. An Authorised Firm Authorised Person will not have to make a formal application but will have to give its written consent for the waiver to apply.

      Consent during application for authorisation

      8. An applicant for authorisation may request a waiver whilst its application for authorisation is being processed. Insome circumstances, the applicant may need to work with the DFSA in developing the waiver and may not be required to use the formal application process. However, the written consent to the waiver by the Authorised Firm Authorised Person will then be required once the applicant is authorised.

      Application of waived rules

      9. If a waiver directs that a rule is to apply to an Authorised Firm Authorised Person with modifications, then contravention of the modified rule could lead to the DFSA taking enforcement action.
      10. If a waiver is given subject to a condition, the waiver will not apply to activities conducted in breach of the condition, and those activities, if in breach of the original rule, could lead to enforcement action.

      GEN 3.3 Publication of waivers

      GEN 3.3 Guidance

      1. Under the Regulatory Law 2004, unless the DFSA dissatisfied that it is inappropriate or unnecessary to doso, it must publish a waiver in such a way as it considers appropriate for bringing the notice to the attention of:
      a. those likely to be affected by it; and
      b. others who may be likely to become subject to similar notice.
      2. The principal method of publication of waivers is by publication on the DFSA website.
      3. If an Authorised Firm Authorised Person believes there are reasonable grounds for the DFSA either to withhold publication or to publish the waiver without disclosing the identity of the Authorised Firm Authorised Person it should make this clear in its application.

      GEN 3.4 Continuing relevance of waivers

      GEN 3.4.1

      An Authorised Firm Authorised Person must immediately notify the DFSA if it becomes aware of any material change in circumstances which could affect the continuing relevance of a waiver.

      GEN 3.5 Withdrawal or variation of waivers

      GEN 3.5 Guidance

      Under Article 25, the DFSA may:

      a. on its own initiative or on the application of the Person to whom it applies, withdraw a written notice; or
      b. on the application of, or with the consent of, the Person to whom it applies, vary a written notice.

      GEN 4 Requirement to provide a Report

      GEN 4.1 Application

      GEN 4.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      GEN 4.1.1 Guidance

      1. In summary, under Article 74, the DFSA may require an Authorised Firm Authorised Person to provide it with a report on any matter.
      2. The Person appointed to make a report, must be a Person nominated or approved by the DFSA. This Person will be referred to throughout the Rulebook as an independent expert.
      3. Where such a requirement has been made of an Authorised Firm Authorised Person it must take all reasonable steps to ensure that any Person who is providing or has provided services to the Authorised Firm Authorised Person shall give all such assistance as the independent expert may reasonably require.
      4. As outlined in Article 74, information given or a document produced is admissible in evidence in administrative and civil proceedings, provided that any such information or document also complies with any requirements relating to the admissibility of evidence in such proceedings.
      5. An Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee in respect of the requirement to provide a report.

      GEN 4.2 Appointment and reporting process

      GEN 4.2.1

      (1) The DFSA may, by sending a notice in writing, require an Authorised Firm Authorised Person to provide a report by an independent expert. The DFSA may require the report to be in whatever form it specifies in the notice.
      (2) The DFSA will give written notification to the Authorised Firm Authorised Person of the purpose of its report, its scope, the timetable for completion and any other relevant matters.
      (3) The independent expert must be appointed by the Authorised Firm Authorised Person and be nominated or approved by the DFSA.
      (4) The Authorised Firm Authorised Person must pay for the services of the independent expert.

      GEN 4.2.1 Guidance

      1. If the DFSA decides to nominate the independent expert, it will notify the Authorised Firm Authorised Person accordingly. Alternatively, if the DFSA is content to approve the independent expert selected by the Authorised Firm Authorised Person it will notify it of that fact.
      2. The DFSA will only approve an independent expert that in the DFSA's opinion has the necessary skills to make a report on the matter concerned.

      GEN 4.3 Requirements

      GEN 4.3.1

      When an Authorised Firm Authorised Person appoints an independent expert, the Authorised Firm Authorised Person must ensure that:

      (a) the independent expert co-operates with the DFSA; and
      (b) the Authorised Firm Authorised Person provides all assistance that the independent expert may reasonably require.

      GEN 4.3.2

      When an Authorised Firm Authorised Person appoints an independent expert, the Authorised Firm Authorised Person must, in the contract with the independent expert:

      (a) require and permit the independent expert to co-operate with the DFSA in relation to the Authorised Firm Authorised Person and to communicate to the DFSA information on, or his opinion on, matters of which he has, or had, become aware of in his capacity as an independent expert reporting on the Authorised Firm Authorised Person in the following circumstances:
      (i) the independent expert reasonably believes that, as regards the Authorised Firm Authorised Person concerned:
      (A) there is or has been, or may be or may have been, a contravention of any relevant requirement that applies to the Authorised Firm Authorised Person concerned; and
      (B) that the contravention may be of material significance to the DFSA in determining whether to exercise, in relation to the Authorised Firm Authorised Person concerned, any powers conferred on the DFSA under any provision of the Regulatory Law 2004;
      (ii) the independent expert reasonably believes that the information on, or his opinion on, those matters may be of material significance to the DFSA in determining whether the Authorised Firm Authorised Person concerned satisfies and will continue to satisfy the fit and proper requirements; or
      (iii) the independent expert reasonably believes that the Authorised Firm Authorised Person is not, may not be, or may cease to be, a going concern;
      (b) require the independent expert to prepare a report, as notified to the Authorised Firm Authorised Person by the DFSA, within the time specified by the DFSA; and
      (c) waive any duty of confidentiality owed by the independent expert to the Authorised Firm Authorised Person which might limit the provision of information or opinion by that independent expert to the DFSA in accordance with (a) or (b).

      GEN 4.3.3

      An Authorised Firm Authorised Person must ensure that the contract required under rule 4.3.2:

      (a) is governed by the laws of the DIFC;
      (b) expressly provides that the DFSA has a right to enforce the provisions included in the contract under rule 4.3.2;
      (c) expressly provides that, in proceedings brought by the DFSA for the enforcement of those provisions, the independent expert is not to have available by way of defence,set-off or counter claim any matter that is not relevant to those provisions;
      (d) if the contract includes an arbitration agreement, expressly provides that the DFSA is not, in exercising the right in (b) to be treated as a party to, or bound by, the arbitration agreement; and
      (e) provides that the provisions included in the contract under rule 4.3.2 are irrevocable and may not be varied or rescinded without the DFSA's consent.

      GEN 5 Imposing Restrictions

      GEN 5.1 Application

      GEN 5.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      GEN 5.1.1 Guidance

      1. Article 75 provides the DFSA with the power to impose restrictions on an Authorised Firm Authorised Person's business. This includes prohibiting an Authorised Firm Authorised Person from entering into specific or certain types of transactions, from soliciting business from specific or certain types of Person or from carrying on business in aspecific manner. The DFSA may also require an Authorised Firm Authorised Person to carry on business in, and only in, specified manner.
      2. Article 76 provides the DFSA with the power to prohibit or require an Authorised Firm Authorised Person to deal with any relevant Property in a certain manner.
      3. The DFSA may exercise its powers to impose a prohibition or requirement in the circumstances prescribed in the Rules.
      4. The DFSA is conscious that the decision to exercise these powers will have significant impact on the Authorised Firm Authorised Person and accordingly will only doso in exceptional circumstances.

      GEN 5.2 Restrictions on an Authorised Firm Authorised Person's business or on an Authorised Firm Authorised Person dealing with property

      GEN 5.2.1

      The DFSA has the power to impose a prohibition or requirement on an Authorised Firm Authorised Person in relation to the Authorised Firm Authorised Person's business or in relation to the Authorised Firm Authorised Person dealing with Property under Article 75 or Article 76 in circumstances where:

      (a) there is a reasonable likelihood that the Authorised Firm Authorised Person will contravene a requirement of any legislation applicable in the DIFC;
      (b) the Authorised Firm Authorised Person has contravened a relevant requirement and there is a reasonable likelihood that the contravention will continue or be repeated;
      (c) there is loss, risk of loss, or other adverse effect on the Authorised Firm Authorised Person's customers;
      (d) an investigation is being carried out in relation to an act or omission by the Authorised Firm Authorised Person that constitutes or may constitute a contravention of any applicable law or Rule;
      (e) enforcement action has commenced against the Authorised Firm Authorised Person for a contravention of any applicable law or Rule;
      (f) civil proceedings have commenced against the Authorised Firm Authorised Person;
      (g) the Authorised Firm Authorised Person or any Employee of the Authorised Firm Authorised Person may be or has been engaged in market abuse;
      (h) the Authorised Firm Authorised Person issubject to a merger;
      (i) a meeting has been called to consider a resolution for the winding up of the Authorised Firm Authorised Person;
      (j) an application has been made for the commencement of any insolvency proceedings or the appointment of any receiver, administrator or provisional liquidator under the law of any country for the Authorised Firm Authorised Person;
      (k) there is a notification to dissolve the Authorised Firm Authorised Person or strike it from the DIFC Registrar of Companies or the comparable register in another jurisdiction;
      (l) there is information to suggest that the Authorised Firm Authorised Person is involved in financial crime; or
      (m) the DFSA considers that this prohibition or requirement is necessary to ensure customers, users, Authorised Firm Authorised Persons or the financial system are not adversely affected.

      GEN 5.3 Procedure to restrict an Authorised Firm Authorised Person's business or property

      GEN 5.3 Guidance

      1. Where possible an Authorised Firm Authorised Person will receive an opportunity to make representations prior to the DFSA imposing a restriction on its business or Property unless the DFSA concludes that any delay likely to arise as a result of such requirement is prejudicial to the interests of the DIFC. When making a representation the process in END App3should be followed.
      2. An Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee in respect of a restriction imposed on its business or Property.
      3. When the DFSA imposes a restriction it will doso in writing setting out:
      a. the restriction on the business or property;
      b. the date and time when the restriction takes effect;
      c. where applicable, the duration of the restriction;
      d. the reasons for the restriction; and
      e. the fact that the Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee.

      GEN 6 [Not currently used]

      GEN 7 Notifications

      GEN 7.1 Application

      GEN 7.1.1

      This chapter applies to every Authorised Firm Authorised Person with respect to the carrying on of Financial Services and any other activities whether financial or not.

      GEN 7.1.1 Guidance

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

      GEN 7.2 Core information

      GEN 7.2.1

      An Authorised Firm Authorised Person must provide the DFSA with reasonable advance notice of a change in:

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

      GEN 7.2.2

      A Domestic Firm must provide the DFSA 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 7.2.2 Guidance

      Authorised Firms should refer to AUT in respect of notification requirements in relation to fitness and propriety and change in control matters.

      GEN 7.3 Regulatory impact

      GEN 7.3.1

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

      GEN 7.3.1 Guidance

      The DFSA would also require notification of the implementation, or planned implementation of major new or revised IT systems or new technology affecting the Authorised Firm Authorised Person's business, risk profile or resources.

      GEN 7.4 Fraud and errors

      GEN 7.4.1

      An Authorised Firm Authorised Person must notify the DFSA immediately if one of the following events arises in relation to its activities in or from the DIFC:

      (a) it becomes aware that an Employee may have committed a fraud against one of its customers or users;
      (b) a serious fraud has been committed against it;
      (c) it has reason to believe that a Person 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 Employees who is Connected with the Authorised Firm Authorised Person's Financial Services may be guilty of serious misconduct concerning his honesty or integrity.

      GEN 7.5 Other regulators

      GEN 7.5.1

      An Authorised Firm Authorised Person must advise the DFSA 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 DIFC;
      (b) the granting, withdrawal or refusal of an application for, or revocation of, membership of the Authorised Firm Authorised Person of any regulated Exchange or clearing house;
      (c) the Authorised Firm Authorised Person becomes aware that a Financial Services Regulator has started an investigation into the affairs of the Authorised Firm Authorised Person;
      (d) the appointment of inspectors, howsoever named, by a Financial Services Regulator to investigate the affairs of the Authorised Firm Authorised Person; or
      (e) the imposition of disciplinary measures or disciplinary sanctions on the Authorised Firm Authorised Person in relation to its Financial Services by any Financial Services Regulator or any regulated Exchange or Clearing House.

      GEN 7.6 Action against an Authorised Firm Authorised Person

      GEN 7.6.1

      An Authorised Firm Authorised Person must notify the DFSA immediately if:

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

      GEN 7.7 Winding up, bankruptcy and insolvency

      GEN 7.7.1

      An Authorised Firm Authorised Person must notify the DFSA immediately on:

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

      GEN 7.8 Change in an Authorised Firm's financial year end.

      GEN 7.8 Guidance

      1. GEN rule 8.3.5 requires a Domestic Firm to obtain DFSA consent prior to implementing a change to its financial year end.
      2. GEN rule 8.3.6 requires an Authorised Firm which is not a Domestic Firm to provide the DFSA with reasonable advance notice when it intends to change its financial year.

      GEN 7.9 Accuracy of information

      GEN 7.9 Guidance

      Article 66 states that a Person shall not:

      a. provide information that is false, misleading or deceptive to the DFSA; or
      b. conceal information where the concealment of such information is likely to mislead or deceive the DFSA.

      GEN 7.9.1

      An Authorised Firm Authorised Person must take reasonable steps to ensure that all information that it provides to the DFSA in accordance with any legislation applicable in the DIFC 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 DFSA would reasonably expect to be notified.

      GEN 7.9.2

      (1) An Authorised Firm Authorised Person must notify the DFSA immediately it becomes aware, or has information that reasonably suggests, that it:
      (a) has or may have provided the DFSA 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 7.10 Provision of notifications

      GEN 7.10.1

      (1) Unless a rule states otherwise, an Authorised Firm Authorised Person must ensure that each notification it provides to the DFSA is:
      (a) in writing and contains the Authorised Firm Authorised Person's name and license number; and
      (b) addressed for the attention of the supervision Division and delivered to the DFSA by:
      (i) post to the current address of the DFSA;
      (ii) hand delivered to the current address of the DFSA;
      (iii) electronic mail to an address provided by the DFSA; or
      (iv) faxed to a fax number provided by the DFSA.
      (2) In (1)(b)(ii),(iii) and (iv) confirmation of receipt must be obtained.

      GEN 8 Reporting

      GEN 8.1 Application

      GEN 8.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      GEN 8.1.1 Guidance

      1. The purpose of this chapter is to outline the process and requirements that must be followed when making a report to the DFSA.
      2. Other sections of the Rulebook outline the specific reports that must be provided and states the due date, frequency, timeframe for delivery and the contents that are required in the report.
      3. In order to discharge its obligations and meet its objectives under the Regulatory Law 2004, the DFSA requires timely and accurate information about an Authorised Firm Authorised Person.

      GEN 8.2 Provision of regulatory reports

      GEN 8.2.1

      (1) Unless a rule states otherwise, an Authorised Firm Authorised Person must ensure that each report it provides to the DFSA is:
      (a) in writing and contains the Authorised Firm name and Licence number; and
      (b) addressed for the attention of the supervision Division and delivered to the DFSA by:
      (i) post to the current address of the DFSA;
      (ii) hand delivered to the current address of the DFSA;
      (iii) electronic mail to an address provided by the DFSA; or
      (iv) faxed to a fax number provided by the DFSA.
      (2) In (1)(b)(ii),(iii) and (iv) confirmation of receipt must be obtained.
      (3) If the report is submitted in paper form, it must be submitted with the coversheet contained in PFN.

    • Annex E Supervision (SUP)

      In this Annex, underlining indicates new text and striking through indicates deleted text.

      SUP 2 Information Gathering

      SUP 2.1 Application

      SUP 2.1.1

      This chapter applies to an Authorised Firm Authorised Person with respect to the carrying on of all of its activities and takes into account any activities of other Members of the Group of which the Authorised Firm Authorised Person is a Member.

      SUP 2.2 Information and documents

      SUP 2.2 Guidance

      1. In order to supervise the conduct and activities of Authorised Firm Authorised Persons and Authorised Individuals the DFSA needs to have access to a broad range of information about an Authorised Firm Authorised Person's business.
      2. The power for the DFSA to obtain information and require an Authorised Firm Authorised Person to produce information and documents is provided under Article 73.
      3. The DFSA will provide Authorised Firm Authorised Persons with written notice of the documents and information that are required.
      4. The Regulatory Law 2004 allows the DFSA to make a request for information and documents from an Authorised Firm Authorised Person wherever that Authorised Firm Authorised Person may be located. This allows the DFSA access to the head office of a Branch or Subsidiary and the provision of documents from its head office.
      5. Article 73(4) allows the DFSA, on application to the Court, to exercise these rights outside the jurisdiction of the DIFC in relation to a Person other than an Authorised Firm Authorised Person and require such a Person to comply with the requirement or permit the exercise of the DFSA's rights.

      SUP 2.2.1

      An Authorised Firm Authorised Person must where reasonable:

      (a) give or procure the giving of specified information, documents, files, tapes, computer data or other material in the Authorised Firm Authorised Person's possession or control to the DFSA;
      (b) make its Employees, readily available for meetings with the DFSA;
      (c) give the DFSA access to any information, documents, records, files, tapes, computer data or systems, which are within the Authorised Firm Authorised Person's possession or control and provide any facilities to the DFSA;
      (d) permit the DFSA to copy documents or other material on the premises of the Authorised Firm Authorised Person at the its DFSA's reasonable expense and to remove copies and hold them elsewhere or;
      (e) to provide any copies as requested by the DFSA; and
      (f) answer truthfully, fully and promptly, all questions which are put to it by the DFSA.

      SUP 2.2.2

      An Authorised Firm Authorised Person must take reasonable steps to ensure that its Employees act in the manner set out in this chapter.

      SUP 2.2.3

      An Authorised Firm Authorised Person must take reasonable steps to ascertain if there is any secrecy or data protection legislation that would restrict access to any data by the Authorised Firm Authorised Person or the DFSA. Where such legislation exists, the Authorised Firm Authorised Person must keep copies of relevant documents or material in a jurisdiction which does allow access in accordance with legislation applicable in the DIFC.

      SUP 2.3 Access to premises

      SUP 2.3 Guidance

      1. Under Article 73, the DFSA may enter the premises of any Authorised Firm Authorised Person during normal business hours or at any other time as may be agreed, for the purpose of inspecting and copying information or documents stored in any form on such premises, as it considers necessary or desirable to meet the objectives of the DFSA.
      2. The DFSA expects to be able to give reasonable notice to an Authorised Firm Authorised Person or Person when it seeks information, documents, meetings or access to premises. On rare occasions however, the DFSA may seek access to premises without notice. The prospect of unannounced visits is intended to encourage Authorised Firm Authorised Persons to comply with the legislation applicable in the DIFC.
      3. Pursuant to Articles 67 and 72 (2), Authorised Firm Authorised Persons are required to give full co-operation and respond to any regulatory request.

      SUP 2.4 Third party providers and supliers

      SUP 2.4.1

      An Authorised Firm Authorised Person must ensure that the terms of its contract with each third party provider or supplier under a material outsourcing arrangement requires the third party to:

      (a) provide for the provision of information under this chapter in relation to the Authorised Firm Authorised Person and access to their business premises; and
      (b) deal in an open and co-operative way with the DFSA.

      SUP 2.4.1 Guidance

      1. The DFSA will normally seek information from an Authorised Firm Authorised Person in the first instance, but reserves the right to seek it from supplier under a material outsourcing arrangement if appropriate.
      2. A material outsourcing arrangement would be a service of such importance that weakness, or failure of the service would cast serious doubt on the Authorised Firm Authorised Person's continuing ability to remain fit and proper or comply with applicable laws including Rules.
      3. GEN rule 5.3.22 requires an Authorised Firm Authorised Person to inform the DFSA about any material outsourcing arrangements.
      4. The Regulatory Law 2004 requires co-operation and disclosure by an Authorised Firm Authorised Person's auditor and may involve the DFSA meeting or requesting documents or information from the Authorised Firm Authorised Person's auditors.

      SUP 2.5 Lead regulation

      SUP 2.5.1

      (1) If requested by the DFSA, an Authorised Firm Authorised Person must provide the DFSA with information that the Authorised Firm Authorised Person or its auditor has provided to a Financial Services Regulator.
      (2) If requested by the DFSA, an Authorised Firm Authorised Person must take reasonable steps to provide the DFSA with information that other Members of the Authorised Firm Authorised Person's Group has provided to a Financial Services Regulator.

      SUP 2.5.1 Guidance

      1. Under Article 39 the DFSA may exercise its powers for the purpose of assisting other Regulators or agencies.
      2. The DFSA may also delegate functions and powers to representatives of other Regulators or agencies as prescribed in Article 40.

      SUP 3. Waivers

      SUP 3.1 Application

      SUP 3.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      SUP 3.1.1 Guidance

      1. Under Article 25, the DFSA may by means of a written notice provide that one or more provisions of the Rules either:
      a. shall not apply in relation to a particular person; or
      b.shall apply to a particular Person with such modifications as a reset out in the written notice.
      2. This chapter sets out Rules in connection with the provision of a written notice under Article 25 including Rules prescribing procedures for the making of applications and providing of consents.
      3. It is unlikely that the DFSA will waive the following Rules:
      a. Rules in GEN chapters 2 and 3; or
      b. Rules in COB part 1.

      SUP 3.1.2

      Throughout the Rulebook reference to the written notice under Article 25 will be referred to as a 'waiver'.

      SUP 3.2 Procedures for application for waivers

      SUP 3.2 Guidance

      A wWaiver application forms are is contained in PFN.

      Application by an Authorized Firm

      SUP 3.2.1

      If an Authorised Firm wishes to apply for a waiver, it must apply in writing and the application must be delivered to the DFSA as outlined insection 7.10. 11

      SUP 3.2.2

      The application must contain:

      (a) the name and Licence number of the Authorised Firm Authorised Person;
      (b) the rule to which the application relates;
      (c) a clear explanation of the waiver that is being applied for and the reason why the Authorised Firm Authorised Person is requesting the waiver;
      (d) details of any other requirements; for example, if there is aspecific period for which the wavier is required;
      (e) if the Authorised Firm Authorised Person has any reason why the waiver should not be published or why it should be published without disclosing the identity of the Authorised Firm Authorised Person; and
      (f) all relevant facts to support the application.

      SUP 3.2.3

      An Authorised Firm Authorised Person must immediately notify the DFSA if it becomes aware of any material change in circumstances which may affect the application for a waiver.

      Determination of waivers

      SUP 3.2.3 Guidance

      1. The DFSA will acknowledge an application for a waiver and may request further information. The time taken to determine the application for a waiver will depend upon the issues it raises.
      2. The determination of a waiver is at the discretion of the DFSA and it will generally only apply a waiver where there is shown to be an appropriate and justifiable reason.
      3. The DFSA may impose conditions on a waiver, for example additional reporting requirements
      4. A waiver may be given for a specified period of time only, after which time it will cease to apply.
      5. If the DFSA decides not to give a waiver, it will give reasons for the decision.
      6. An Authorised Firm Authorised Person may withdraw its application for a waiver at any time up until the giving of the waiver. In doingso, an Authorised Person should give reasons for the withdrawing of the application.

      General waivers

      7. Where the DFSA considers that a waiver should apply to a number of Authorised Firm Authorised Persons, for example, where a rule unmodified may not meet the particular circumstances of a particular Category of Authorised Firm Authorised Person the DFSA will inform the Authorised Firm Authorised Persons concerned that the waiver is available, either by contacting Authorised Firm Authorised Persons individually or by publishing details of the availability of the waiver on the DFSA's website. An Authorised Firm Authorised Person will not have to make a formal application but will have to give its written consent for the waiver to apply.

      Consent during application for authorisation

      8. An applicant for authorisation may request a waiver whilst its application for authorisation is being processed. Insome circumstances, the applicant may need to work with the DFSA in developing the waiver and may not be required to use the formal application process. However, the written consent to the waiver by the Authorised Firm Authorised Person will then be required once the applicant is authorised.

      Application of waived rules

      9. If a waiver directs that a rule is to apply to an Authorised Firm Authorised Person with modifications, then contravention of the modified rule could lead to the DFSA taking enforcement action.
      10. If a waiver is given subject to a condition, the waiver will not apply to activities conducted in breach of the condition, and those activities, if in breach of the original rule, could lead to enforcement action.

      SUP 3.3 Publication of waivers

      SUP 3.3 Guidance

      1. Under the Regulatory Law 2004, unless the DFSA dissatisfied that it is inappropriate or unnecessary to doso, it must publish a waiver in such a way as it considers appropriate for bringing the notice to the attention of:
      a. those likely to be affected by it; and
      b. others who may be likely to become subject to similar notice.
      2. The principal method of publication of waivers is by publication on the DFSA website.
      3. If an Authorised Firm Authorised Person believes there are reasonable grounds for the DFSA either to withhold publication or to publish the waiver without disclosing the identity of the Authorised Firm Authorised Person it should make this clear in its application.

      SUP 3.4 Continuing relevance of waivers

      SUP 3.4.1

      An Authorised Firm Authorised Person must immediately notify the DFSA if it becomes aware of any material change in circumstances which could affect the continuing relevance of a waiver.

      SUP 3.5 Withdrawal or variation of waivers

      SUP 3.5 Guidance

      Under Article 25, the DFSA may:

      a. on its own initiative or on the application of the Person to whom it applies, withdraw a written notice; or
      b. on the application of, or with the consent of, the Person to whom it applies, vary a written notice.

      SUP 4 Requirement to provide a Report

      SUP 4.1 Application

      SUP 4.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      SUP 4.1.1 Guidance

      1. In summary, under Article 74, the DFSA may require an Authorised Firm Authorised Person to provide it with a report on any matter.
      2. The Person appointed to make a report, must be a Person nominated or approved by the DFSA. This Person will be referred to throughout the Rulebook as an independent expert.
      3. Where such a requirement has been made of an Authorised Firm Authorised Person it must take all reasonable steps to ensure that any Person who is providing or has provided services to the Authorised Firm Authorised Person shall give all such assistance as the independent expert may reasonably require.
      4. As outlined in Article 74, information given or a document produced is admissible in evidence in administrative and civil proceedings, provided that any such information or document also complies with any requirements relating to the admissibility of evidence in such proceedings.
      5. An Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee in respect of the requirement to provide a report.

      SUP 4.2 Appointment and reporting process

      SUP 4.2.1

      (1) The DFSA may, by sending a notice in writing, require an Authorised Firm Authorised Person to provide a report by an independent expert. The DFSA may require the report to be in whatever form it specifies in the notice.
      (2) The DFSA will give written notification to the Authorised Firm Authorised Person of the purpose of its report, its scope, the timetable for completion and any other relevant matters.
      (3) The independent expert must be appointed by the Authorised Firm Authorised Person and be nominated or approved by the DFSA.
      (4) The Authorised Firm Authorised Person must pay for the services of the independent expert.

      SUP 4.2.1 Guidance

      1. If the DFSA decides to nominate the independent expert, it will notify the Authorised Firm Authorised Person accordingly. Alternatively, if the DFSA is content to approve the independent expert selected by the Authorised Firm Authorised Person it will notify it of that fact.
      2. The DFSA will only approve an independent expert that in the DFSA's opinion has the necessary skills to make a report on the matter concerned.

      SUP 4.3 Requirements

      SUP 4.3.1

      When an Authorised Firm Authorised Person appoints an independent expert, the Authorised Firm Authorised Person must ensure that:

      (a) the independent expert co-operates with the DFSA; and
      (b) the Authorised Firm Authorised Person provides all assistance that the independent expert may reasonably require.

      SUP 4.3.2

      When an Authorised Firm Authorised Person appoints an independent expert, the Authorised Firm Authorised Person must, in the contract with the independent expert:

      (a) require and permit the independent expert to co-operate with the DFSA in relation to the Authorised Firm Authorised Person and to communicate to the DFSA information on, or his opinion on, matters of which he has, or had, become aware of in his capacity as an independent expert reporting on the Authorised Firm Authorised Person in the following circumstances:
      (i) the independent expert reasonably believes that, as regards the Authorised Firm Authorised Person concerned:
      (A) there is or has been, or may be or may have been, a contravention of any relevant requirement that applies to the Authorised Firm Authorised Person concerned; and
      (B) that the contravention may be of material significance to the DFSA in determining whether to exercise, in relation to the Authorised Firm Authorised Person concerned, any powers conferred on the DFSA under any provision of the Regulatory Law 2004;
      (ii) the independent expert reasonably believes that the information on, or his opinion on, those matters may be of material significance to the DFSA in determining whether the Authorised Firm Authorised Person concerned satisfies and will continue to satisfy the fit and proper requirements; or
      (iii) the independent expert reasonably believes that the Authorised Firm Authorised Person is not, may not be, or may cease to be, a going concern;
      (b) require the independent expert to prepare a report, as notified to the Authorised Firm Authorised Person by the DFSA, within the time specified by the DFSA; and
      (c) waive any duty of confidentiality owed by the independent expert to the Authorised Firm Authorised Person which might limit the provision of information or opinion by that independent expert to the DFSA in accordance with (a) or (b).

      SUP 4.3.3

      An Authorised Firm Authorised Person must ensure that the contract required under rule 4.3.2:

      (a) is governed by the laws of the DIFC;
      (b) expressly provides that the DFSA has a right to enforce the provisions included in the contract under rule 4.3.2;
      (c) expressly provides that, in proceedings brought by the DFSA for the enforcement of those provisions, the independent expert is not to have available by way of defence,set-off or counter claim any matter that is not relevant to those provisions;
      (d) if the contract includes an arbitration agreement, expressly provides that the DFSA is not, in exercising the right in (b) to be treated as a party to, or bound by, the arbitration agreement; and
      (e) provides that the provisions included in the contract under rule 4.3.2 are irrevocable and may not be varied or rescinded without the DFSA's consent.

      SUP 5 Imposing Restrictions

      SUP 5.1 Application

      SUP 5.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      SUP 5.1.1 Guidance

      1. Article 75 provides the DFSA with the power to impose restrictions on an Authorised Firm Authorised Person's business. This includes prohibiting an Authorised Firm Authorised Person from entering into specific or certain types of transactions, from soliciting business from specific or certain types of Person or from carrying on business in aspecific manner. The DFSA may also require an Authorised Firm Authorised Person to carry on business in, and only in, specified manner.
      2. Article 76 provides the DFSA with the power to prohibit or require an Authorised Firm Authorised Person to deal with any relevant Property in a certain manner.
      3. The DFSA may exercise its powers to impose a prohibition or requirement in the circumstances prescribed in the Rules.
      4. The DFSA is conscious that the decision to exercise these powers will have significant impact on the Authorised Firm Authorised Person and accordingly will only doso in exceptional circumstances.

      SUP 5.2 Restrictions on an Authorised Firm Authorised Person's business or on an Authorised Firm Authorised Person dealing with property

      SUP 5.2.1

      The DFSA has the power to impose a prohibition or requirement on an Authorised Firm Authorised Person in relation to the Authorised Firm Authorised Person's business or in relation to the Authorised Firm Authorised Person dealing with Property under Article 75 or Article 76 in circumstances where:

      (a) there is a reasonable likelihood that the Authorised Firm Authorised Person will contravene a requirement of any legislation applicable in the DIFC;
      (b) the Authorised Firm Authorised Person has contravened a relevant requirement and there is a reasonable likelihood that the contravention will continue or be repeated;
      (c) there is loss, risk of loss, or other adverse effect on the Authorised Firm Authorised Person's customers;
      (d) an investigation is being carried out in relation to an act or omission by the Authorised Firm Authorised Person that constitutes or may constitute a contravention of any applicable law or Rule;
      (e) enforcement action has commenced against the Authorised Firm Authorised Person for a contravention of any applicable law or Rule;
      (f) civil proceedings have commenced against the Authorised Firm Authorised Person;
      (g) the Authorised Firm Authorised Person or any Employee of the Authorised Firm Authorised Person may be or has been engaged in market abuse;
      (h) the Authorised Firm Authorised Person issubject to a merger;
      (i) a meeting has been called to consider a resolution for the winding up of the Authorised Firm Authorised Person;
      (j) an application has been made for the commencement of any insolvency proceedings or the appointment of any receiver, administrator or provisional liquidator under the law of any country for the Authorised Firm Authorised Person;
      (k) there is a notification to dissolve the Authorised Firm Authorised Person or strike it from the DIFC Registrar of Companies or the comparable register in another jurisdiction;
      (l) there is information to suggest that the Authorised Firm Authorised Person is involved in financial crime; or
      (m) the DFSA considers that this prohibition or requirement is necessary to ensure customers, users, Authorised Firm Authorised Persons or the financial system are not adversely affected.

      SUP 5.3 Procedure to restrict an Authorised Firm Authorised Person's business or property

      SUP 5.3 Guidance

      1. Where possible an Authorised Firm Authorised Person will receive an opportunity to make representations prior to the DFSA imposing a restriction on its business or Property unless the DFSA concludes that any delay likely to arise as a result of such requirement is prejudicial to the interests of the DIFC. When making a representation the process in END App3should be followed.
      2. An Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee in respect of a restriction imposed on its business or Property.
      3. When the DFSA imposes a restriction it will doso in writing setting out:
      a. the restriction on the business or property;
      b. the date and time when the restriction takes effect;
      c. where applicable, the duration of the restriction;
      d. the reasons for the restriction; and
      e. the fact that the Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee.

      SUP 6 [Not currently used]

      SUP 7 Notifications

      SUP 7.1 Application

      SUP 7.1.1

      This chapter applies to every Authorised Firm Authorised Person with respect to the carrying on of Financial Services and any other activities whether financial or not.

      SUP 7.1.1 Guidance

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

      SUP 7.2 Core information

      SUP 7.2.1

      An Authorised Firm Authorised Person must provide the DFSA with reasonable advance notice of a change in:

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

      SUP 7.2.2

      A Domestic Firm must provide the DFSA with reasonable advance notice of the establishment or closure of a Branch office anywhere in the world from which it carries on Financial Services.

      SUP 7.2.2 Guidance

      Authorised Firms should refer to AUT in respect of notification requirements in relation to fitness and propriety and change in control matters.

      SUP 7.3 Regulatory impact

      SUP 7.3.1

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

      SUP 7.3.1 Guidance

      The DFSA would also require notification of the implementation, or planned implementation of major new or revised IT systems or new technology affecting the Authorised Firm Authorised Person's business, risk profile or resources.

      SUP 7.4 Fraud and errors

      SUP 7.4.1

      An Authorised Firm Authorised Person must notify the DFSA immediately if one of the following events arises in relation to its activities in or from the DIFC:

      (a) it becomes aware that an Employee may have committed a fraud against one of its customers or users;
      (b) a serious fraud has been committed against it;
      (c) it has reason to believe that a Person 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 Employees who is Connected with the Authorised Firm Authorised Person's Financial Services may be guilty of serious misconduct concerning his honesty or integrity.

      SUP 7.5 Other regulators

      SUP 7.5.1

      An Authorised Firm Authorised Person must advise the DFSA 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 DIFC;
      (b) the granting, withdrawal or refusal of an application for, or revocation of, membership of the Authorised Firm Authorised Person of any regulated Exchange or clearing house;
      (c) the Authorised Firm Authorised Person becomes aware that a Financial Services Regulator has started an investigation into the affairs of the Authorised Firm Authorised Person;
      (d) the appointment of inspectors, howsoever named, by a Financial Services Regulator to investigate the affairs of the Authorised Firm Authorised Person; or
      (e) the imposition of disciplinary measures or disciplinary sanctions on the Authorised Firm Authorised Person in relation to its Financial Services by any Financial Services Regulator or any regulated Exchange or Clearing House.

      SUP 7.6 Action against an Authorised Firm Authorised Person

      SUP 7.6.1

      An Authorised Firm Authorised Person must notify the DFSA immediately if:

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

      SUP 7.7 Winding up, bankruptcy and insolvency

      SUP 7.7.1

      An Authorised Firm Authorised Person must notify the DFSA immediately on:

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

      SUP 7.8 Change in an Authorised Firm's financial year end.

      SUP 7.8 Guidance

      1. GEN rule 8.3.5 requires a Domestic Firm to obtain DFSA consent prior to implementing a change to its financial year end.
      2. GEN rule 8.3.6 requires an Authorised Firm which is not a Domestic Firm to provide the DFSA with reasonable advance notice when it intends to change its financial year.

      SUP 7.9 Accuracy of information

      SUP 7.9 Guidance

      Article 66 states that a Person shall not:

      a. provide information that is false, misleading or deceptive to the DFSA; or
      b. conceal information where the concealment of such information is likely to mislead or deceive the DFSA.

      SUP 7.9.1

      An Authorised Firm Authorised Person must take reasonable steps to ensure that all information that it provides to the DFSA in accordance with any legislation applicable in the DIFC 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 DFSA would reasonably expect to be notified.

      SUP 7.9.2

      (1) An Authorised Firm Authorised Person must notify the DFSA immediately it becomes aware, or has information that reasonably suggests, that it:
      (a) has or may have provided the DFSA 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.

      SUP 7.10 Provision of notifications

      SUP 7.10.1

      (1) Unless a rule states otherwise, an Authorised Firm Authorised Person must ensure that each notification it provides to the DFSA is:
      (a) in writing and contains the Authorised Firm Authorised Person's name and license number; and
      (b) addressed for the attention of the supervision Division and delivered to the DFSA by:
      (i) post to the current address of the DFSA;
      (ii) hand delivered to the current address of the DFSA;
      (iii) electronic mail to an address provided by the DFSA; or
      (iv) faxed to a fax number provided by the DFSA.
      (2) In (1)(b)(ii),(iii) and (iv) confirmation of receipt must be obtained.

      SUP 8 Reporting

      SUP 8.1 Application

      SUP 8.1.1

      This chapter applies to every Authorised Firm Authorised Person.

      SUP 8.1.1 Guidance

      1. The purpose of this chapter is to outline the process and requirements that must be followed when making a report to the DFSA.
      2. Other sections of the Rulebook outline the specific reports that must be provided and states the due date, frequency, timeframe for delivery and the contents that are required in the report.
      3. In order to discharge its obligations and meet its objectives under the Regulatory Law 2004, the DFSA requires timely and accurate information about an Authorised Firm Authorised Person.

      SUP 8.2 Provision of regulatory reports

      SUP 8.2.1

      (1) Unless a rule states otherwise, an Authorised Firm Authorised Person must ensure that each report it provides to the DFSA is:
      (a) in writing and contains the Authorised Firm name and Licence number; and
      (b) addressed for the attention of the supervision Division and delivered to the DFSA by:
      (i) post to the current address of the DFSA;
      (ii) hand delivered to the current address of the DFSA;
      (iii) electronic mail to an address provided by the DFSA; or
      (iv) faxed to a fax number provided by the DFSA.
      (2) In (1)(b)(ii),(iii) and (iv) confirmation of receipt must be obtained.
      (3) If the report is submitted in paper form, it must be submitted with the coversheet contained in PFN.

      Annex F

    • Annex F Glossary (GLO)

      In this Annex, underlining indicates new text and striking through indicates deleted text.

      Authorised Person

      An Authorised Firm or an Authorised Market Institution.

      Business Rules

      The written rules of an Authorised Market Institution which govern its activities as an Authorised Market Institution.

      Convertible

      An investment Investment that gives the an investor the right to convert the Security into equity another form of Security at an agreed price or on an agreed basis.

      Exempt Offer

      Has the meaning given in OSR rule 2.4.3.

      Issue Note

      A document forming part of a Prospectus containing the information required under OSR rule 7.4.2(b).

      Key Individuals

      Employees of an Authorised Market Institution assigned to oversee a Regulatory Function.

      Licensing Requirements

      The requirements set out in section 7.2 of AMI in relation to the granting of a Licence to an Authorised Market Institution.

      Market Misconduct

      Conduct which contravenes a provision contained in chapter 1 of Part 8 of the Markets Law 2004.

      Members

      Means any Person admitted as a Member to an Authorised Market Institution in accordance with the Authorised Market Institution's Business Rules.

      Money Laundering Reporting Officer (MLRO)

      For the purposes of AMI, an individual who is a Director, Partner or other appropriately senior Employee of an Authorised Market Institution who has responsibility for the Authorised Market Institution's compliance with the Rules in chapter 11 and any relevant Money Laundering legislation applicable to the AMI.

      The Licensed Function described in AUT rule 10.2.2(g).

      Price Sensitive

      Information of a type which is liable to cause substantial movement in the price of Securities or (in the case of Debentures) to affect significantly the ability of the Issuer to meet its commitments.

      Qualified Invester

      A Person specified in OSR rule 3.3.2.

      Recognition

      The status acquired by a Person to whom the DFSA has issued a Recognition Notice pursuant to Article 61 of the Regulatory Law 2004.

      Recognised Person

      A Recognised Body or a Recognised Member.

      Registration Statement

      A document forming part of a Prospectus containing the information required under OSR rule 7.4.2(a).