Are companies going easy on disclosure requirements?

ABU DHABI/DUBAI: Many companies listed on UAE’s stock markets seem to be soft-pedalling the on-going disclosure requirements.

It has been discovered that quite often, disclosures by certain companies reach stock markets in the form of ‘confirmations of media reports’ rather than the companies directly apprising of the developments to the markets where their shares are listed.

Whether it be the news of two leading banks in the UAE signing memorandum of understanding (MoU) with Israeli banks, or the issue of $500 million sukuk by Emirates Islamic Bank (EIB), they had hit media headlines well before being reported to the stock markets where thousands of their uninitiated shareholders search for authentic and relevant information on their companies.

And the latest in the series was the news on Abu Dhabi Developmental Holding Company’s (ADQ) acquisition of 22.25 per cent of the Dubai Financial Market (DFM)-listed Aramex. In this case too, the official clarification came after a couple of days of the news appearing in the media.

And in most cases, the companies have gone easy on reporting to the stock markets, and when the disclosures were made to the stock markets, they were done as responses to the queries from the stock market authorities on having sought the authenticity of the said news.

For example, the communication to Dubai Financial Market (DFM) from EIB on its sukuk issue stated, “With reference to your e-mail addressed to Emirates Islamic Bank (EIB) on September 16 and with regard to the bank’s news confirmation concerning the bank’s intention to issue Sukuk, and your request to the bank to confirm the validity of this news and to determine the amount or size of this issue. EIB would like to confirm the validity of this news, as the bank has issued $500 million sukuk for a period of five years.”

Nevertheless, the companies can very well argue that they are obligated to inform the market only material and price sensitive information and this is an issue even also believes to be debatable, at least in the case of developments such as signing MoUs.

Having said this, there are companies such as Du, Tabreed, etc (names are taken arbitrarily) that had meticulously released information on each stage of a particular development.

Law No (4) of 2000, concerning the Emirates Securities and Commodities Authority (ESCA) and Market says, “The listed company undertakes to notify the Market of any material updates or any information or data that may affect the company’s share price, before being published in the media or disclosed to any other party, until it is disclosed by the Market.”

Article 15 says “material developments shall be disclosed in the form of an official press release issued by the company to the Market.

Further, it says that the company shall immediately notify the Market of any material developments, and shall not provide its shareholders or traders with a statement of such developments until such disclosure is coordinated with the Market.

“If material developments occur during public holidays, the company shall notify the Market and the ESCA immediately upon resumption of work and before the beginning of the first trading session following the said holiday,” it further says.


Leave a Reply

Your email address will not be published. Required fields are marked *