The United Arab Emirates has become one of the hotspots for financial activities in the Middle East, with businesses and investors worldwide coming together. This is promoted by a strong regime of regulations which are put in place by the Securities and Commodities Authority (SCA). A Securities Dealers License is the most important prerequisite for any operator who wants to become a part of the dynamic securities market of the UAE. This article provides vital information in regard to the process of licensing, the criteria for eligibility, and the need for legal advice in order to ensure a smooth journey of application.
What is a Securities Dealers License in the UAE?
A Securities Dealers License issued by the SCA grants permission to a firm to conduct several activities of trading in securities within the UAE. The list of activities includes:
- Buying and selling securities on behalf of clients.
- Underwriting securities offerings.
- Giving investment advice.
The type of license to be obtained determines the scope of operations. You shall be advised to carefully consider your business model, then choose the type of license which is going to suit your needs the best.
Who Needs a Securities Dealers License?
Any person, whether local or foreign, that intends to deal in securities in the UAE needs to be licensed to deal in securities. This category will include:
- Brokerage firms
- Investment houses
- Asset management companies
- Investment advisors, either individual investors or firms.
Specific exemptions may be applied depending on the nature of your activities. Therefore, the best recommendation remains to seek proper legal advice from a lawyers in Dubai specializing in UAE securities law to determine if a license is required for your particular business model.
Legal Framework Governing Securities Dealers Licenses
The legal framework for the Securities Dealers License in the UAE is provided by the following:
- Federal Law No.8 of 2002: This law is otherwise known as the Securities and Commodities Authority Law. It provides for the establishment of the SCA and defines its roles in regulating the securities market. It defines the activities requiring licensing and empowers the SCA to grant and cancel licenses.
- SCA Regulations: This law is also called the Securities and Commodities Authority Law. It caters to the establishment of the SCA and defines the roles of SCA in securities market regulation. It defines the activity that requires licensing and empowers the SCA to grant and cancel licenses.
- Board Decisions and Circulars: Various issuances of SCA include Board Decisions and Circulars, which are issued from time to time as additional guidance and clarifications on some areas of the securities regulations. Such issuances could refer to new license categories, updated capital requirements, or mere interpretations of existing regulations.
This is important because it keeps you up to date on new legal developments and helps your business be fully compliant with the dynamic regulatory environment.
Key Requirements for Obtaining a Securities Dealers License
The SCA has listed some of the requirements that are necessary before being issued a Securities Dealers License. Some of the most important criteria are:
- Legal Form: The applicant must be a legal person, and generally, this means being a Limited Liability Company (LLC) or a Public Joint Stock Company (PJSC), duly incorporated in the UAE.
- Minimum Capital: Again, the minimum capital will depend on the type of license, activities of the applicant, and the level of risk inherent in the activities. It may vary from AED 1 million to AED 50 million.
- Qualified Staff: The applicant must have persons possessing the relevant qualifications and experience in the securities market. The personnel need to be accredited from SCA.
- Financial Statements: Audited financial statements for the past three years may be required to show the financial soundness of the company.
- Business Plan: The required business plan will spell out the activity it will pursue, the market it will aim to, and its system for risk management.
- Compliance with SCA Regulations: Applicants should be able to demonstrate how they will abide by all the regulations issued by SCA in relation to the trading of securities in the UAE.
The Application Process for a Securities Dealers License
The stages involved in the process of the application for a Securities Dealers License will take it through:
- Preparation of Documents: Preparing a comprehensive set of documents, which includes Business Plans, Financial Statements, and Compliance Policies.
- Submit it to SCA: The complete application, along with the required documents, must be submitted for review to the SCA.
- Assessment and Inspection: The SCA will review the application and may, therefore, inspect on-site to ascertain the validity of the information as given.
- Approval and Licensing: On satisfying all the requirements as put forward, the SCA will issue a Securities Dealers License.
Benefits of Obtaining a Securities Dealers License in the UAE
A Securities Dealers License will open up the following benefits to your business:
- Market Access: A license allows your company the required legal permission to perform security trading activities with complete authorization within the robust financial ecosystem in the UAE.
- Credibility and Reputation: Having a license reflects your commitment to compliance and gives you more credibility with future clients and investors.
- Growth Opportunities: Open up more opportunities to grow in business through the flourishing UAE securities market.
Seek assistance of HHS Lawyers in Obtaining a Securities Dealers License
Obtaining a securities dealer license in the UAE is complex. HHS Lawyers in Dubai are well-versed with UAE financial regulations. They can help and assist in the entire process, from applying for a license to ensuring that all necessary formalities and requirements are complied with. HHS Lawyers shall advice and assist in procuring a Securities Dealer License in a seamless and successful manner.
If you wish to have a Securities Dealer’s License issued in the UAE, please do not hesitate to contact HHS Lawyers today to assist you through the process for smooth and successful application.
