UAE regulator is doing its job

The Securities and Commodities Authority (SCA), the UAE's exchange regulator, has instructed International Petroleum Investment Company to increase its buyout offer to shareholders from Dh1.45 to Dh1.95 per share of subsidiary Aabar Investments, which it aims to delist and take private.

The new offer represents about 65 per cent of Aabar's book value, as opposed to the previous 50 per cent.

SCA has thereby set a welcome precedent — that it is not to be kept out of the loop in matters that concern the health of small shareholders' investments and the equity market in general.

The SCA-mandated 34 per cent increase in the offer sets the foundation for new regulations on mergers and acquisitions, with minority shareholder protection high on that agenda, especially via rules that promote transparency. Aabar has called a general shareholders' meeting on August 15 to discuss the delisting, 10 days after the open offer ends on August 5.

No one wishes to take away an owner's right to establish firmer control over a company. The regulator can, however, promulgate rules on how this can be accomplished without undermining the rights of the small shareholders, and the circumstances under which they can contest actions taken by majority shareholders.