In a long anticipated measure, the Saudi Council of Ministers (which is the highest authority in the Kingdom) issued a resolution on 21 July, 2014 authorizing foreign financial institutions to directly buy and sell stocks listed on the Saudi Stock Exchange (Tadawul). The resolution also authorized the Saudi Capital Market Authority (the “CMA”) to set the timing and rules for such participation. On July 22, 2014, the CMA announced that it will publish draft rules for foreign
Top 4 Innovations Driving Growth in the Global Sukuk Market
The Sukuk Opportunity
Total Sukuk issuances for 2013 stood at approximately US$120 billion and the Sukuk market is likely to sustain double-digit growth in the coming two to three years with assets in Islamic finance expected to reach US$2.8 trillion by 2015.
The growth of the Sukuk market has allowed investors to diversify their portfolio and invest in credit that they would not otherwise have access to, such as Islamic institutions, which only raise funds in a Shari’ah-compliant manner. The
How the GCC Can Boost Confidence in its Local Exchanges
The Gulf Cooperation Council (GCC) countries accounted for IPO issuances valued at US$1.1 billion in 2013, according to Bloomberg. Notably, Qatar Exchange bounced back this year with the successful IPO and listing of Mesaieed Petrochemical Holding company Q.S.C. (a Qatar Petroleum Subsidiary), the first IPO in Qatar since 2010 and the first under the current listing rules of the Qatar Financial Markets Authority.
With momentum returning to local exchanges combined with increasingly favourable market conditions, the GCC IPO
Top 4 Trends that are Shaping UAE Capital Markets
The strengthening global recovery appears to have brought renewed confidence to the UAE’s capital markets. As such, a number of interesting themes have begun to emerge:
Resurgence in Dubai’s Real Estate Sector: Following a four year gap, IPOs and other equity offerings have returned in the form of DAMAC, Al Noor Hospitals, Arabtec, NMC Healthcare and Bank of London and the Middle East. This resurgence can be attributed to the optimism surrounding Dubai’s Expo 2020 bid,
Window for Comments on Saudi CMA’s Draft Guidelines for Public Company Losses Now Closed
The global financial crisis and credit crunch prompted the Capital Markets Authority in Saudi Arabia (the “CMA”) to introduce rules to increase investor awareness of public company financial difficulties. In May 2013, the CMA published draft guidelines and instructions setting out certain rules that apply to public companies when the losses of a public company reaches 50% or more of its share capital (the “Guidelines”). The deadline for the business community to provide comments on the
The Emergence of Egyptian Sukuk
Following widespread debate and commentary on the first draft of the Egyptian sukuk legislation (the sukuk legislation), the Egyptian cabinet has approved a second draft of the sukuk legislation to be presented to the Egyptian Shura Council for parliamentary discussion. The legislation is a significant change in legal direction for Egypt that has only embraced Islamic finance to a limited degree to date.
The first draft of the sukuk legislation was subject to widespread criticism, including that the sukuk legislation
Hong Kong – Getting Set for Sukuk
Following a public consultation process, Hong Kong has commenced the legislative process for the introduction of tax changes to permit the issuance of Sukuk.
The proposed legislation was published in a Legislative Council Brief on December 28, 2012, which seeks to establish a level playing field for the taxation of conventional bonds and Sukuk (referred to as “alternative bond schemes” or “ABS” in the legislation) and details tax exemptions for qualifying structures.
The legislation contemplates four qualifying structures, namely:
New Markets Law Regime Takes Effect in the DIFC
A number of significant changes to the securities and capital markets regime in the Dubai International Financial Centre (DIFC) came into force on 5 July 2012. The changes represent the policy of the DIFC’s regulator, the Dubai Financial Services Authority (DFSA) to more closely align the DIFC with leading benchmark jurisdictions and the requirements of the EU Prospectus Directive (the PD).
The changes include a new DIFC Markets Law (DIFC Law No. 1 of 2012) and an all-new Markets Rules
Japanese Tax Law Reforms Facilitate Issuance of Sukuk by Japanese Companies
The Japanese Financial Services Agency has issued a document (see Taxation of J-Sukuk Q&A) highlighting reforms to Japanese tax laws implemented in 2011 that facilitate the issuance of sukuk by Japanese companies (J-Sukuk).
Following these reforms, distributions paid on J-Sukuk benefit from the same favourable withholding tax treatment as interest or coupons paid on corporate bonds issued by Japanese companies. In addition, if certain conditions are fulfilled, transfers and re-transfers of real estate that constitute the assets referenced in
Current Trends in Islamic Finance on Agenda at Kuala Lumpur Conference
In a session on “Current Trends in Islamic Finance” at the In-House Counsel Congress today in Kuala Lumpur, Latham partners Bryant Edwards and Craig Nethercott discussed the opportunities for Shari’ah compliant debt issuance in the United States capital markets.
“US capital markets remain the deepest capital markets and investors in these markets are increasingly interested in chasing yield, including Shari’ah debt yield, from quality issuers,” commented Edwards, chair of Latham’s Middle East Practice. Nethercott, co-chair the firm’s global Islamic Finance