Change on the exchange
New IR requirements for companies listed in the UAE. As of January 2016, the Securities and Commodities Authority (SCA) will require all companies listed on UAE exchanges to establish and develop an Investor Relations (IR) function.
The new regulations are designed to enable companies to meet the requirements of both national and international investor communities.
Why the change?
By implementing best practices in investor relations management, companies listed on the UAE financial markets are providing investors with access to material information and statements. The intention is to upgrade the quality and consistency in responding to inquiries from analysts and investors, promote international investments and increase stakeholder knowledge and understanding of performance through using the best means of communication.
Overall, best practice compliance means the increased chance of securing institutional investors across global markets who are accustomed to more detailed corporate reporting, access to materials and ongoing communication with Investor Relations Officers (IRO).
The Middle East Investor Relations Society (MERIS) sanctions this new initiative and considers the change a positive development toward ingraining international standards into local market practice. Likewise, the change to the regulation means a push towards companies further developing their capabilities to meet the requirements.
So how does it work?
There are four mandatory stages and three supplementary stages that are designed to enable companies to meet the new requirements in a sustainable fashion.
What are the mandatory requirements?
- All companies must appoint an acting IRO with both Arabic and English language capability, and have both practical expertise and regulatory and legislative proficiency
- All company websites must now incorporate a standalone section dedicated to IR-related disclosures including: contact details, financial reports, AGM and EGM minutes, and any other information relevant to the shareholders
- The IR section of the website should be used by the company to publish information or statements disclosed to the market, regulators and investors, along with any statements on changes in the company or shareholder rights
- At least once a year or following announcement of core financial results, listed companies are now also required to publish investor presentations showing their financial position, strategy and outlook
What are the supplementary requirements?
- Alongside with the Annual Report release deadlines, listed companies may choose to offer financial results via conference call with media, analysts and investors
- They may also pro-actively organise road shows or annual conferences with investors and stakeholders
- Companies may develop a sufficient number of analysts to cover their financial performance
We encourage all listed companies to adopt these guidelines as promptly and fully as possible
Well, Alex MacDonald-Vitale, Chairman of the MEIRS quoted: "We encourage all listed companies to adopt these guidelines as promptly and fully as possible” and “advises management teams to engage proactively with their investor base, and as necessary, seek guidance on best practice."
The LSE, building on its 215-year heritage, serves as an excellent platform to inform other stock exchanges on corporate reporting best practice. In fact, the UK corporate reporting framework itself is commonly accepted to follow leading international best practice, therefore is a useful starting point that will drive companies in the UAE to build a mature and insightful investor profile.