Dubai: The UAE's new companies law will boost the country's private sector and could help the Dubai and Abu Dhabi bourses to meet the parameters prescribed by Morgan Stanley Capital International (MSCI) for emerging market status, WAM reported yesterday.
The draft Companies Law was approved during a Cabinet meeting chaired by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, yesterday.
Analysts said the move could bode well for the upcoming review of the Dubai and Abu Dhabi bourses by MSCI on December 14.
"That could help attract more investment into the UAE's stock markets," said a Dubai-based analyst, requesting anonymity. "However, the market needs more clarity on the changes made," the anaylst added.
According to WAM reports yesterday, Shaikh Mohammad stressed that developing economic legislation was part of the government's strategic approach to add more flexibility for setting up companies in the UAE and enhancing the governance of companies on the country's stock markets.
The new law sets up a general framework for public joint-stock companies to ensure the rights of all stake-holders, transparency, and disclosure of financial statements, and the efficiency and integrity of boards of directors.
"The new law aims to enhance the flexibility and strength of the national economy and keep abreast of global economic changes by preserving a continuous and balanced growth in all economic sectors in the UAE," WAM reported.
Also yesterday, the Cabinet approved a draft federal law regulating the findings of experts that are presented before UAE courts.
It also approved an agreement between the UAE and Indonesia regarding the mutual exemption of entry visas for holders of diplomatic, special or service passports.
Meanwhile, analysts speaking to Bloomberg yesterday were upbeat about the MSCI decision. The index provider in June delayed the decision, citing among others "stringent foreign ownership limits". MSCI will announce its decision on December 14.
"Investors seem to be more optimistic regarding the UAE's chances of an upgrade to emerging market status," said Julian Bruce, Dubai-based equity sales head at EFG-Hermes Holding SAE.