MINISTERIAL RESOLUTION

NO. (728) OF 2008

CONCERNING
THE BOOK BUILDING PROCEDURES FOR SECURITIES
The Minister of Economy and Chairman of the Emirates Securities and Commodities
Authority:
- Having reviewed Federal Law No. (1) of 1972 concerning the Jurisdictions of Ministries
and Authorities of Ministers, as amended;
- Federal Law No. (8) of 1984 concerning Commercial Companies, as amended;
- Federal Law No. (4) of 2000 concerning the Emirates Securities and Commodities
Authority and Market, as amended;
- Federal Decree No. (10) of 2006 issued on 11/2/2006 concerning the Formation of the
Council of Ministers;
- The Council of Ministers Resolution for services No. (3/3) of 2007 delegating to the
Emirates Securities and Commodities Authority to receive applications for the
incorporation of public joint stock companies, to complete all procedures related thereto
and to supervise the same, provided that all decisions in connection thereto shall be issued
by the Ministry of Economy until the issuance of the new law; and
- Based on the presentation of the chief executive of the Emirates Securities and
Commodities Authority,
Has resolved as follows:

Article (1)
Definitions
For the purposes of this Resolution, the following words and expressions shall have the meanings
given to them below unless the context otherwise requires:
State:

The United Arab Emirates.

Federal
Government:

The Government of the United Arab Emirates.

Local
Government:

The government of any member Emirate in the State.

Authority:

The Emirates Securities and Commodities Authority.

Law:

Federal Law No. (4) of 2000 concerning the Emirates

Securities and Commodities Authority.

Companies Law:

Federal Law No. (8) of 1984 concerning Commercial

Companies, as amended and any other law substituting

said law.
Board:

The board of directors of the Authority.

Markets:

The financial markets licensed in the State by the

Authority.

Securities:

Shares, bonds and Sukuk issued by joint stock

companies and bonds and notes issued by the federal or
local governments, public authorities and institutions in
the State, or any other domestic or non-domestic
instruments so designated by the Authority.

Resolution:

This resolution issued concerning the book building

procedures for securities.

Book Building:

The process used to determine the price of Securities

upon issuance or sale in a public offering in accordance
with this Resolution.

Authorized
Entities:

The entities licensed and/or authorized by the Authority

to practice financial consultation, or financial and
technical analysis of companies and valuation thereof,
including entities licensed and/or authorized by the
Authority to practice the activities of promoting,
managing and underwriting subscriptions of Securities.

Issuing Entity:

The entity that issues Securities or sells the same in a

public offering in accordance with this Resolution.

Institutional
Investors:

Corporate entities including banks, financial

institutions, investment funds and other forms of
companies and institutions.

Individual
Investors:

Includes natural persons regardless of their nationality.

Investors:

Institutional Investors and Individual Investors.

Receiving Entities: Banks, companies and institutions licensed by the

competent authorities in the State to receive money
from subscribers.

Article (2)
Scope of Application

Entities wishing to apply the Book Building procedures shall comply with the procedures
provided for in this Resolution. Such entities shall include:
1. The Federal Government, Local Governments, public entities and institutions in the State.
2. Public joint stock companies under formation.
3. Public joint companies wishing to increase their capital through the issuance of new shares,
only where the current shareholders have opted not to subscribe for shares or which have not
been covered by such shareholders and are offered for public subscription.
4. Existing public joint stock companies not having their Securities listed in one of the Markets
in the State, and whose shareholders wish to sell part of such shares in a public offering.
5. Existing companies where their partners or shareholders decide, according to the provisions of
their memorandum of association or articles of association, to convert that company into a
public joint stock company.

Article (3)
Applications
1.

The Issuing Entity shall submit to the Authority, after obtaining all approvals as
required by the Companies Law and the Authority, an application in the form prescribed by
the Authority for this purpose seeking its approval to follow the Book Building process.

2.

The Issuing Entity shall not disclose or reveal, in any form, its intention to issue or
sell Securities by following the Book Building procedures prior to obtaining the approval of
the Authority with respect to the application mentioned in clause (1) herein.

Article (4)
Phase 1: Preliminary Valuation of the Security
1. The Issuing Entity shall select and engage an Authorized Entity to conduct a detailed financial
study for the valuation process and in order to reach a preliminary price for the Securities to
be offered for subscription.
2. The Issuing Entity shall select and engage with another Authorized Entity other than the one
mentioned in clause (1) herein to manage and supervise the subscription of the Securities.
3. The Issuing Entity shall disclose to the engaged Authorized Entities the nature of its business,
its current and future projects, its financial statements, if any, and any other information that
may be necessary to help such Authorized Entities to fulfil their roles.

Article (5)
Phase 2: Meetings
The Authorized Entity engaged for the management and supervision of the subscription shall:

a. Invite a number of Institutional Investors for a series of meetings with the Authorized Entity
engaged for evaluation purposes, in which the latter will present an explanation of its
valuation report.
b. Poll the Institutional Investors to obtain their preliminary feedback regarding the value of the
Securities being offered by the Issuing Entity.
c. Cooperate with the Issuing Entity in studying and analyzing the Institutional Investors'
feedback and in comparing the same with the findings of the Authorized Entities engaged for
evaluation purposes in order to determine the details of the planned offering and the price
range for the Securities being offered.

Article (6)
Phase 3: Prospectus and Offering
1. The Authorized Entity engaged for the management and supervision of the subscription shall:
a. Cooperate with the Issuing Entity to prepare the draft prospectus defining the price range
for the offered Securities, and submit such draft to the Authority for approval in
preparation for the announcement of the offering.
b. Provide presentations to Institutional Investors with respect to the Securities to be offered
by the Issuing Entity.
c. Conduct explanatory and educative presentations to Investors to acquaint them with the
adopted Book Building process.
2. Subject to the approval of the Authority and the Authorized Entity engaged for evaluation

purposes, the Issuing Entity may publish the results of its studies and financial analyses.

Article (7)
Phase 4: Receiving Subscription Orders and Building the Register thereof
1.

Subscription orders related to the offered Securities may be received from Investors, as per
the form prescribed by the Authority, during the period defined in the prospectus, provided
that such orders enclose the amounts of the subscription order.

2.

It is permissible to receive subscription orders from Individual Investors at the same time as
receiving subscription orders from Institutional Investors. It is also permissible to receive
subscription orders in two phases: the first for subscription orders from Institutional Investors
followed by a second phase for Individual Investors, in which case the price of the Securities
is determined on the basis of the outcome of the subscriptions by the Institutional Investors.
The Issuing Entity shall announce such price before the period for the subscription orders of
Individual Investors begins so that such subscriptions are made at such price in the manner
defined in the prospectus.

3.

The Issuing Entity shall register, through the Authorized Entity engaged for the management
and supervision of the subscription, the subscription orders of the Institutional Investors in a
special register for subscriptions in the offered Securities. The Receiving Entities shall receive
the subscription orders from Individual Investors.

4.

The register of subscription orders shall be built using the subscription orders received from
Institutional Investors only.

5.

Upon building the register of subscription orders, the shares of the Institutional Investors
including banks, financial institutions, investment funds and/or other specialized companies
must represent the majority of shares used in calculating the offer price of the relevant
Security.

Article (8)
Phase 5: Pricing and Allotment
1. The Issuing Entity, in cooperation with the Authorized Entity responsible for managing and
supervising the subscription, shall determine the price of the offered Securities in the final
prospectus after analyzing the data of the register prepared for the purpose of subscription
orders provided for in clause )2( of Article (7) herein according to the allocation mechanism
disclosed in the prospectus.
2. Allocation to Individual Investors shall be made according to the provisions of the Companies
Law at the price determined as per clause (1) herein. It is permissible to reduce the price
determined for Individual Investors from that determined for Institutional Investors according
to disclosures made in the final prospectus.

Article (9)
General Provisions
1. All procedures not regulated by this Resolution shall be governed by the provisions and
procedures set forth in the Companies Law, and the implementing regulations and resolutions
thereof, including the completion of subscription by the founders as per the percentages they
are permitted to subscribe for in the capital of public joint stock companies under formation.
2. The Issuing Entity shall offer a minimum portion of 20% of the offered Securities to
Individual Investors, and a minimum portion of 60% of the offered Securities to Institutional
Investors.
3. The Issuing Entity may allocate to Institutional Investors within the limits of the submitted
subscription orders such portion allocated to Individual Investors but not subscribed for.
4. In the event the Institutional Investors have not covered the minimum portion allocated to
them as stipulated in clause (2) herein, and/or in the event of breaching the provision of clause
(5) of Article (7) herein in relation to the shares of Institutional Investors, the subscription
shall be cancelled in the manner adopted in this Resolution, and the Issuing Entity shall
cooperate with the Receiving Entities to refund the amounts received from Investors for the
subscription in addition to the accrued proceeds of such amounts as from the date of receiving
the same until the date of refund. Such refund must not be later than five (5) days from the
date of closing the subscription.

5. In case of failure of an offering in any phase thereof as per the manner adopted in this
Resolution, the Issuing Entity may not submit to the Authority a new application for the same
purpose for a period of six (6) months following the issuance of the Authority's letter
announcing the end of the offering in accordance with this Resolution.

Article (10)
The Authority shall have the authority to control and oversee the application of this Resolution.

Article (11)
Penalties and Sanctions
[

In case of a breach by the Issuing Entity of the provisions of this Resolution or if an Issuing
Entity has failed to submit any documents or information relevant to the Book Building
procedures, the Authority may take any of the following administrative actions pursuant to its
discretional powers:
1.
2.

Withdraw or suspend its approval of the Issuing Entity's application.

Cancel subscription in the public offering as per the manner adopted in this Resolution

Article (12)
Publishing
This Resolution shall be published in the Official Gazette and shall come into effect as of the
date of publication.