Banks’ Acquisition of Own Shares Regulation

CBUAE Classification: Public Banks’ Acquisition of Own Shares Regulation

2 CBUAE Classification: Public CONTENTS Page Subject Introduction 3 Scope 3 Objective 3 Article (1) Definitions 3 1 4 2 Central Bank prior approval required for banks’ acquisition of own shares Article (2) Article (3) Maximum limit 4 3 4 Obligation to notify the Central Bank of breach of the regulatory obligations Article (4) Article (5) Enforcement & Sanctions 5 5 Article (6) Interpretation of Regulation 5 6 Article (7) Publication & Effective Date 5 7

3 CBUAE Classification: Public التعميم رقم : 2021/20 20/2021 : Circular No. التاريخ: 2021/12/21 21/12/2021 : Date الى: كافة البنوك Banks All : To الموضوع: حدود تملك البنوك ألسهمها of acquisition’ Banks on Limits : their own shares Subject المقدمة Introduction In accordance with Article 93(3) of the Central Bank Law, the Central Bank can set a limit on the amount of own shares a Bank can buy back or acquire. Through this Regulation, the Central Bank is now confirming its requirements for Article 93(3) of the Central Bank Law. نطاق التطبيق Scope This Regulation applies to all Banks .ينطبقمهذصمصانظلممعدىمكلفةمصابناك . الهدف Objective The objective of this Regulation is to define the regulatory obligations that apply to Banks, relating to acquisitions or buy backs of their own shares. المادة )1( : التعريفات Definitions :)1 (Article Bank: Any juridical person licensed in accordance with the provisions of the Central Bank Law, to primarily carry on the activity of taking deposits, and any other Licensed Financial Activities, as defined in the Central Bank Law. 1.1 Central Bank: The Central Bank of the United Arab Emirates. 1.2 Central Bank Law: Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organisation of Financial Institutions and Activities, as amended from time to time. 1.3

4 CBUAE Classification: Public Paid Up Share Capital: The share capital of a company which is fully paid. 1.4 Article (2): Central Bank prior approval required for banks’ acquisition of own shares A Bank shall not directly or indirectly acquire, purchase, buy-back or deal in its own shares without prior written approval of the Central Bank, unless shares have devolved to it in accordance with Article 2.2 of this Regulation. 2.1 In accordance with Article 93(3) of the Central Bank Law, where shares have devolved to a Bank in settlement of a debt, and the Bank is therefore holding its own shares exceeding the maximum limit prescribed in Article (3) of this Regulation, the Bank must sell the excess shares, within a period of two (2) years from date of acquisition. 2.2 The Central Bank, in granting any approval under Article 2.1 of this Regulation, may request any information it requires in order to make an appropriate decision. The Central Bank, in granting any approval under Article 2.1 of this Regulation, may impose any limitations or conditions on the Bank that it considers appropriate. 2.3 . The Central Bank may, on application by a Bank in writing, extend the period referred to in Article 2.2 of this Regulation for such period and on such conditions as the Central Bank considers appropriate. 2.4 المادة )3( : الحد األقصى limit Maximum :)3 (Article A Bank shall not be permitted to directly or indirectly purchase, acquire, buy-back or hold any amount of its own shares exceeding ten percent (10%) of the Bank’s Paid Up Share Capital. 3.1

5 CBUAE Classification: Public Article (4): Obligation to notify the Central Bank of breach of regulatory obligations Banks which breach or are likely to breach any provision as per this Regulation must immediately notify the Central Bank in writing. 4.1 المادة )5( : اإلنفاذ والجزاءات Sanctions & Enforcement :)5 (Article Violation of any provision of this Regulation and any accompanying Standards may be subject to supervisory action and sanctions as deemed appropriate by the Central Bank including the measures stated in Article 44 (1) of the Central Bank Law “Protection of Licensed Financial Institutions” 5.1 المادة )6(: تف ير النظام Regulation of Interpretation :)6 (Article The Regulatory Development Division of the Central Bank shall be the reference for interpretation of the provisions of this Regulation. 6.1 المادة )7( : النشر وتاريخ النفاذ Date Effective & Publication :)7 (Article This Regulation shall be published in the Official Gazette in both Arabic and English and shall come into effect one month from the date of publication. 7.1 Khaled Mohamed Balama Governor of the Central Bank of the UAE