DFM to allow free zone firms to go public

The Dubai Financial Market (DFM) has completed a draft law to facilitate the 3,000 companies registered with the three free zones to go public and get listed on DFM.

Top officials of DFM who confirmed this, said the legal umbrella for this progressive initiative is complete and an agreement between these free zones and DFM will be signed shortly.

Once the legal framework is officially announced, those companies which are largely foreign-owned will be able to raise funds from the local market.

"DFM is unlikely to fix any lower ceiling of capital to be floated for the public, which will provide the promoters of these companies the much-needed freedom on the ownership structure of these companies," sources explained to Gulf News.

While Jebel Ali Free Zone has more than 2,300 companies registered with the free zone, Dubai Airport Free Zone (Dafz) has close to 200 companies which include some reputed international names.

The newest free zone - Dubai Technology, E-commerce and Media Free Zone (Tecom) which accommodates around 600 companies - has top IT companies as well as media outfits registered with it.

While the UAE company law prescribes a minimum capital of Dh10 million for setting up a public joint stock company, the minimum capital requirement for the free zone-based companies is $700,000 (Dh2.5 million).

A top official of DFM said that the move conforms to the international trend as it will allow foreigners not only to raise funds from the local market, but will offer the much-needed exit route.

Since free zone companies are normally set up under the sole ownership of foreigners, liquidating their assets is a real issue as there is no exit route now and so the new agreement will address this issue.

Dubai International Financial Centre (DIFC) is also setting up a regional securities market which, once operational, aims to list reputed regional companies on its bourse.

However, the director general of DFM, Essa Abdulfatt-ah Kazim, who is also on the board of DIFC, has made it clear that there will be a working arrangement between DIFC and DFM to ensure a mutually beneficial co-existence.