03 Jul 2023

New SCA Regulation on Public Offering: the time has come for free zone companies to consider going public

Authored by: Yasser Omar

In Brief:

  • In late 2020 the SCA Resolution no. 25/RM of 2020 amended the provisions of SCA Resolution no. 11/RM of 2016 on the Regulation of Offering and Issuance of Shares of Joint Stock Companies allowing free zone companies to offer their shares for subscription through an initial public offering on either the ADX or Dubai Financial Market.
  • Since the Resolution, a number of businesses have established a free zone company in order to list on the ADX, including many notable businesses such as Borouge PLC, Americana Restaurants PLC and ADNOC GAS PLC.

On 8 December 2020, we published an article detailing Resolution no. 25/RM of 2020 (“Resolution”) which was issued by the Board of the Securities and Commodities Authority (“SCA”) that amended the provisions of SCA Resolution no. 11/RM of 2016 on the Regulation of Offering and Issuance of Shares of Joint Stock Companies. Under the Resolution it became possible for companies registered in the applicable UAE free zones, being the Jebel Ali Free Zone, Dubai International Financial Centre and Abu Dhabi Global Markets (“ADGM”), to offer their shares in the UAE outside of their free zone of incorporation provided that they satisfy the relevant requirements. Accordingly, the Resolution allowed these free zone companies to take advantage of the benefits of being incorporated in an applicable free zone while having access to the vibrant capital markets of the UAE.

Companies incorporated in free zones are generally not subject to any withholding tax or restrictions on repatriation of profits, and can benefit from corporate tax concessions and any applicable Double Tax Treaties between the UAE and foreign governments. Further, free zone companies are generally permitted to have 100% foreign ownership.

Since the passing of the Resolution, a number of businesses have taken advantage of the new rules to utilise free zone companies as their listing vehicles. In 2022, the UAE accounted for 3 of the 10 largest initial public offerings globally, of which 2 were companies incorporated in the ADGM and listed on the Abu Dhabi Securities Exchange (“ADX”), being Borouge PLC and Americana Restaurants PLC. In addition, ADNOC Gas PLC, which by market capitalisation represented the single largest IPO globally in the first quarter of 2023, was also incorporated as an ADGM company and listed on the ADX. Other notable ADGM companies which have listed on the ADX include ADNOC Logistics & Services PLC, Bayanat AI PLC, Burjeel Holdings PLC, Fertiglobe PLC, Invictus Investment Company PLC and Presight AI Holding PLC.

Going forward, in view of the benefits of incorporating in applicable free zones, allied with the growing success in the development of capital markets in the UAE in terms of attracting local and foreign capital, it is expected that the trends described above will continue.

Here are some details regarding the listing of applicable free zone companies under the Resolution:

  • A free zone company wishing to offer shares in a public offering must have a minimum paid up capital of AED 20 million;
  • The net shareholders’ equity must be at least 100% of paid up capital;
  • The shares offered in a public subscription shall not be less than 25% or not more than 70% of the capital. As an exception, 100% of the capital may be offered if it is limited to qualified investors;
  • The free zone company must have conducted an independent activity as its main activity directly or through one or more of its subsidiaries for at least two fiscal years prior to the offering application (and such activity must be disclosed within its audited financial statements for such fiscal years); and
  • The free zone company must have achieved net profits from such main activity, directly or through one or more of its subsidiaries, for at least two fiscal years prior to the offering application.

Should you require any information relating to listing on the ADX as a free zone company or otherwise, please contact Yasser Omar, Executive Partner and Head of Corporate and Commercial, Abu Dhabi.


This article, together with any commentary, does not constitute legal advice. It is provided solely for information purposes on a complimentary basis, without consideration of any specific objectives, circumstances or facts. It reflects then current views of the writer which may modify in time and based on differing objectives, circumstances or facts. A writer's view may differ from views of colleagues and/or the firm. You should seek legal advice on each specific matter. Access to this article does not form an attorney-client relationship.