Proposed Enhancements to the Registration Authority’s Investigative Powers

CONSULTATION PAPER
NO. 1 OF 2024
PROPOSED ENHANCEMENTS TO THE
REGISTRATION AUTHORITY’S INVESTIGATIVE
POWERS
29 February 2024

Consultation Paper No. 1 of 2024
CONTENTS
Introduction .............................................................................................................................. 3
Enhancement of RA’s Investigative Powers .......................................................................... 4
Proposed Amendments and Enactments ............................................................................... 5

Consultation Paper No. 1 of 2024
Why are we issuing this paper?
The Abu Dhabi Global Market (“ADGM”) Registration Authority (“RA”) has issued this Consultation Paper to invite public feedback and comments on proposed amendments to the Commercial Licensing Regulations 2015 (“CLR 2015”) that will enhance the RA’s investigative powers. The proposed amendments are set out in Annex A to this Consultation Paper. Who should read this paper? The proposals in this Consultation Paper would be of interest to all individuals and organisations operating or proposing to operate in the ADGM and their professional advisors. How to provide comments All comments should be in writing and sent to the address or email specified below. If sending your comments by email, please use the Consultation Paper number in the subject line. If relevant, please identify the organisation you represent when providing your comments. The RA reserves the right to publish, including on its website, any comments you provide, unless you expressly request otherwise at the time of making any comments. Comments supported by reasoning and evidence will be given more weight. What happens next? The deadline for providing comments on this proposal is 17 March 2024. After receiving your comments, we shall consider whether any modifications are required to the proposals and the ADGM Board and the RA will then proceed to enact the proposals in their final form. You should not act on these proposals until these proposals are finalised and the final Regulations enacted by the ADGM Board and published by the RA. We shall issue a notice on our website when this happens. Comments to be addressed to:
Consultation Paper No. 1 of 2024
Registration Authority
Abu Dhabi Global Market Square Al Maryah Island PO Box 111999 Abu Dhabi, UAE Email: consultation@adgm.com Introduction

Consultation Paper No. 1 of 2024
Current Position

1. The RA is responsible for monitoring and enforcing non-compliance with ADGM’s
   commercial legislation. The Commercial Licensing Regulations 2015 (“CLR 2015”) provides the RA with the majority of its investigative powers such as appointment of investigators, information gathering and conducting interviews.
2. Over time, the nature and scope of investigations conducted by the RA has become more
   complex and varied, from concerns regarding fitness and propriety of directors, to beneficial ownership non-compliance and auditor oversight. The RA has encountered situations where the subjects of investigations have refused to cooperate, which has delayed and hampered some investigations.
3. The RA is therefore seeking to enhance its current powers, aligning them with the
   investigative powers of other comparable corporate regulatory authorities in the region and abroad. The amendments aim to improve the effectiveness and efficiency of the RA in carrying out its statutory duties and to protect ADGM’s reputation from non-compliance and misconduct.
4. A draft of the proposed amendments to the CLR 2015 can be found in Annex A.
   Proposed Changes
5. The RA proposes to amend the CLR 2015 to introduce provisions enhancing the RA’s
   investigative powers as well as regarding the costs of investigations, in certain circumstances.
6. The proposed amendments will introduce the following powers:
   a. Ability of the RA to record interviews; b. Ability of the RA to give directions on the conduct of interviews, e.g., on who can be present, requiring persons to give an affirmation that their answers will be true, and requiring an interviewee to answer relevant questions;
   c. Ability of the RA to enter the premises of a person under investigation during normal
   business hours to inspect and copy relevant documents stored in the premises; d. Ability of the RA to apply to the ADGM Courts to recover the costs of an investigation in cases where a person is found liable of breaching ADGM rules and regulations; Enhancement of RA’s Investigative Powers

Consultation Paper No. 1 of 2024 e. Making it a contravention to fail to attend an interview, destroy documents, give false or misleading information, or fail to produce required documentation / information in relation to a requirement notice; f. Requiring a person to give any assistance to the investigation, which the person is able to give; g. Making directions to protect the confidentiality of information and documents which are
part of an interview, including any notices to provide assistance or attend an interview;
h. Increasing the fine level for failure to comply with a requirement of the Registrar from level 6 to level 8; and
i. Increasing the fine level for contravention of a relevant requirement under the CLR
2015 from level 5 to level 8.
Regulations
Annex A Proposed Commercial Licensing Regulations (Amendment No.1) 2024
Proposed Amendments and Enactments
Q1: DO YOU HAVE ANY CONCERNS WITH, OR FEEDBACK ON, THE PROPOSED POWERS DESCRIBED ABOVE?

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Consultation Paper No. 1 of 2024
Annex A
COMMERCIAL LICENSING REGULATIONS (AMENDMENT NO. 1) 2024

Consultation Paper No. 1 of 2024
Annex A

COMMERCIAL LICENSING REGULATIONS (AMENDMENT NO. 1) 2024 Date of Enactment: [] 2024 The Board of Directors of the Abu Dhabi Global Market, in exercise of its powers under Article 6(1) of Law No. 4 of 2013 (as amended) concerning the Abu Dhabi Global Market issued by his Highness the Ruler of the Emirate of Abu Dhabi enacts the following Regulations:

1. Amendments to the Commercial Licensing Regulations 2015
   The Commercial Licensing Regulations 2015 shall be amended as follows – (1) In the Table of Contents, insert a new section 35A immediately after section 35. (2) In section 33, insert new subsection (3) as follows:
   “(3) Where the investigator considers that the person who is the subject of the investigation ("the person under investigation") or any person connected with the person under investigation is or may be able to give information or produce a document which is or may be relevant to an investigation, it may — (a) enter the business premises of such person during normal business hours for the purpose of inspecting and copying information or documents stored in any form on such premises; (b) require such person to give it any assistance in relation to the investigation which the person is able to give.” (3) The existing subsection 33(3) shall be renumbered as 33(4) and the words “under subsections (1) or (2)” shall be replaced with “under subsections (1), (2) or (3).” (4) In section 33, insert new subsections (5), (6), (7), (8), (9), (10), (11) and (12) as follows:
   “(5) Where the investigator exercises its power under subsection (3)(a) to enter the business premises, it may— (a) require any appropriate person to make available any relevant information stored at those premises for inspection or copying; (b) require any appropriate person to convert any relevant information into a form capable of being copied; and (c) use the facilities of the occupier of the premises, free of charge, to make copies. (6) Where the investigator exercises its power under subsection (1)(a) to conduct an interview, it may give a direction— (a) concerning who may be present;

Consultation Paper No. 1 of 2024
Annex A

(b) preventing any person present during any part of the interview from disclosing to any other person any information provided to the interviewee or questions asked by the interviewer during the interview; (c) concerning the conduct of any person present, including as to the manner in which they will participate in the interview; (d) requiring the interviewee to swear an oath or give an affirmation that the answers of the interviewee will be true; and (e) requiring the interviewee to answer any questions relevant to the investigation. (7) All interviews conducted pursuant to (1)(a) will be recorded, and the interviewee generally will be given the opportunity to request a copy of the recording or a transcript of the interview, if available. (8) The provision of a recording or transcript pursuant to subsection (7) may be subject to any reasonable conditions imposed by the investigator. (9) A person shall not without reasonable excuse engage in any conduct, including without limitation the— (a) destruction of documents;

(b) failure to give or produce information or documents specified by the investigator; (c) failure to attend before the investigator at a specified time and place to answer questions; (d) giving of information that is false or misleading; or (e) failure to give any assistance in relation to an investigation which the person is able to give; that is intended to obstruct the investigator in the exercise of any powers under this
Part.
(10) Where a person makes a statement in response to any question asked or produces information or documents in compliance with a requirement made under subsection (1), the Registrar must maintain confidentiality of such statement, information or documents, unless disclosure is required by law or court order to disclose the information. (11) The investigator may make directions to protect the confidentiality of information and documents which are part of an interview. (12) Where the investigator considers that, if disclosed, the fact of the issuing of a notice

Consultation Paper No. 1 of 2024
Annex A

requiring a person to—
(a) produce documents;
(b) give information;
(c) attend a compulsory interview; or
(d) give assistance; may hinder the investigation to which it relates, the investigator may direct a person who receives a notice under subsections (1), (2) or (3) not to disclose the receipt of a notice or any information relating to compliance therewith to any other person, other than his legal representative under a duty of confidentiality.” (5) The existing subsections 33(4), 33(5) and 33(6) shall be renumbered as 33(13), 33(14) and 33(15). (6) In section 34, delete section 34(1) in its entirety and replace it in full with the following:
“(1) An investigator conducting an investigation under this section 34 shall have the powers conferred by section 33.” (7) After section 35, insert a new section 35A as follows:
“35A Costs of an investigation
(1) Subject to subsection (2), the Registrar shall be responsible for the costs and expenses of an investigation. (2) Where, as a result of an investigation under this Part, a person is found by the Registrar or court to have committed the contravention of these Regulations which is the subject matter of the investigation, the court may order, on application brought by the Registrar, that the person pay or reimburse the Registrar in respect of the whole, or a specified part of, the costs and expenses of the investigation, including the remuneration of any person involved in the investigation. (3) The court may make an order under subsection (2), on an application by the Registrar, whether or not the person has commenced, or intends to commence, a reference, appeal or other proceeding in relation to a decision of the Registrar. (4) The Registrar may apply to the court for an order under subsection (2) only where there are proceedings before the court relating to the alleged contravention by the person. (5) The Registrar may enter into any agreement regarding costs with the person who is the subject of the investigation.” (8) In section 39:
(a) Insert a new subsection (3) immediately after subsection (2) as follows:

Consultation Paper No. 1 of 2024
Annex A

“(3) A person who fails to comply with a requirement of the Registrar made under this Part, commits a contravention of these Regulations.” (b) Delete the existing subsection (5) in its entirety and replace it in full with the following:
“(6) A person who commits any of the contraventions set out in subsections (3) to (5) shall be liable to a fine not exceeding level 8 on the standard fines scale.” (c) The existing subsections 39(3), 39(4), 39(5) and 39(6) shall be renumbered as 39(4), 39(5), 39(6) and 39(7). (9) In section 41(1), replace the words “level 5” with the words “level 8”. (10) In section 74(1), replace the numbers “2015” with “2020”.
2. Short title, extent and commencement
(1) These Regulations may be cited as the Commercial Licensing Regulations (Amendment No.1) 2024. (2) These Regulations shall apply in the Abu Dhabi Global Market. (3) These Regulations come into force on the date of their publication.