Chapter 4 follows securities through the UAE markets: how they are issued, held and settled, and what happens when a listed company gets into difficulty, across shares, debt, Sukuk, derivatives and crypto assets. It carries 14 of the 100 exam questions, and most of its rules come with a deadline, a threshold or a named body that must act.
With 14 of the 100 questions, this is a substantial chapter and a varied one. It starts with the Depository Centre, which keeps ownership records and completes settlement, then turns to offering shares in public joint-stock companies and buying them back. It covers the mechanism for troubled listed companies, the conciliation route for certain offences, and the listing rules for debt securities, Islamic securities, Sukuk and derivatives. It ends with the 2020 crypto asset regulation of the Securities and Commodities Authority (SCA), called the Authority in the rules. The rules here are precise: who must act, by when, and above what figure. Learn each one with its number attached, and keep similar periods apart.
The Depository Centre, governed by SCA Decision No. 19 of 2018, opens securities accounts, keeps the records that prove ownership, registers pledges and liens, and sees that final settlement follows the law and the regulations of both the Authority and the market. To protect the seller, securities pass to the buyer only once payment is assured. The centre does not match orders, set prices or judge suitability. It owes the Authority a quarterly financial report, reviewed by its external auditor, within 45 days of quarter-end, and an audited annual report within three months of year-end. A merger or acquisition needs the Authority's approval in advance, and its internal auditor cannot be removed without at least 30 days' reasoned notice to both the Authority and the auditor. Issuers approved for listing send it a current shareholder register within one week.
SCA Resolution No. 11 of 2016 sets the offering conditions for public joint-stock companies. A newly incorporated company needs working capital for twelve months and a listing adviser for two years from listing, and unless it is a bank, finance corporation or insurer, only qualified investors may subscribe. A company that converts to public joint-stock form needs net operating profit equal to at least 10% of capital across the two financial years before approval. A rights issue is announced at least 20 business days before subscription opens, and the rights, which trade separately, must be tradable for at least 10 business days. Buy-backs for resale fall under Decision No. 40 of 2015: they need two financial years of listing, a special resolution of the General Assembly and the Authority's approval, and are capped at 10% of issued and paid-up capital.
SCA Decision No. 13 of 2020 places every listed company in the first category to begin with. A company moves to the second category if its accumulated losses reach 50% of capital, or its shares have been suspended for six months or more. The market reviews categories yearly, when audited annual accounts arrive, and announces each transfer on its website. Shares in the second category still trade, shown on a dedicated screen that flags them to investors. A joint committee formed by the Authority monitors a watch-list company for one year, extendable to three. It must submit a regularisation plan approved by its board and an Authority-approved expert entity, then report progress every three months or on request. If the Authority decides, after consulting the market, to delist, it tells the company within 30 days.
Some offences committed by public joint-stock companies, for example a breach of the rules on calling the annual general assembly, can be settled under SCA Decision No. 42 of 2015 by paying a prescribed amount, so that no criminal case is brought. Private disputes and client complaints fall outside it. The violator applies on the Authority's form with supporting documents, before the criminal case goes to the competent court. Applying pauses the steps towards prosecution until the committee decides, and the committee has 15 working days from receipt of a complete application to do so. If the Public Prosecution has already been asked to act, it is told of the outcome. Once the application is approved and the amount paid, no case is started, and the violator waives its legal rights and claims on the matter.
SCA Decision No. 17 of 2014 governs debt securities and defines qualified investors. Some qualify by status, such as governments and their wholly owned companies, international bodies, and firms licensed by the Authority or a comparable regulator. Other companies must pass two of three financial tests. Individuals must pass the wealth and income tests and either show adequate knowledge and experience or be represented by an Authority-licensed firm. A listing application includes a draft prospectus and the latest audited accounts of the issuer and any guarantor; a convertible issue must explain how conversion works. Listings normally need an aggregate value of AED 10 million, unless the Authority decides otherwise. Changed terms in a public issue are announced at once, voluntary cancellation needs at least 90 days' written notice, and a listing suspended for more than six months may be cancelled.
SCA Decision No. 20 of 2018 covers the offer and listing of Islamic securities. The offering document names every Shariah Supervisory Committee member with qualifications and expertise, and explains how resources and disposal proceeds are to be reallocated if the security or issuer loses Shariah compliance. A foreign issuer gives the Authority statements on conflicts of law and Shariah principles, on tax differences and, where it has pledged to follow both, on conflicts between IFRS and AAOIFI standards. Sukuk fall under Decision No. 16 of 2014: a minimum total nominal value of AED 10 million, Shariah approval from the obligor's own committee or one approved by the arranger, advance Authority approval for advertisements by non-government issuers, and audited annual accounts within 180 days of year-end. The obligor reports any change of UAE paying agent to the Authority and the market.
SCA Decision No. 22 of 2018 puts the main duties on the market. All exchange-traded derivative trades must be settled through a central counterparty. The market specifies initial margin for its contracts, along with the contract details, the trading days and hours, and its own listing and trading rules, and it keeps information on underlying securities disclosed and up to date. It may impose its own limits; the regulation sets no percentage price band. While derivatives on an underlying security remain unsettled, the market may not deregister that security. The purpose is to control counterparty, margin and settlement risk in leveraged contracts. Margin is not a ceiling on what an investor can lose, and none of these controls removes market risk.
The exam tests the SCA Chairman's crypto asset regulation, Decision No. 23/RM of 2020. A security token is a crypto asset carrying rights like those of a share or a bond; every other crypto asset is a commodity token. Classify by the rights a token gives, not by its use. Only an entity incorporated in the UAE, including its financial free zones, may offer security tokens there. An offer confined to qualified investors has its documentation submitted to the Authority; an offer that includes anyone else needs prior approval. When an offer is open to investors generally, the documentation must explain custody, how keys are created and stored, what happens after a mistaken or fraudulent transfer or a lost key, whether a refund applies if a funding target is missed, and the software investors rely on or must operate.
Custodians keep client crypto assets apart from their own, hold the same asset in amounts matching client entitlements, never lend client assets, and stop any one key holder fully authorising an action alone. Listing normally requires a custodian. A crypto asset exchange needs an Authority licence whose conditions apply continuously, including market surveillance, and must cover a token's technology, hacking vulnerabilities and traceability when applying to list it. A fundraising open to non-qualified investors caps each client at AED 350,000. Financial activities in security tokens or regulated commodity tokens need Authority licensing or approval, and exchange crime prohibitions cover crypto assets traded on a licensed UAE exchange. The Authority inspects licensed persons, offering persons and responsible parties, can access their systems, and can suspend a firm's activity for up to one year and an individual for up to two months.
A short revision checklist written by Bourse Prep from the syllabus and from our verified question bank. Use it to check yourself after studying the chapter. It does not replace the official workbook. Unfamiliar term? See the UAE FRR glossary.
The figures in this chapter that the exam material states, each with the rule it belongs to. Learn the figure and its owner together. Test yourself on them in Rules Lab.
| What | Figure | Context |
|---|---|---|
| Depository Centre reporting deadlines | 45 days; three months | reviewed quarterly report after quarter-end; audited annual report after fiscal year-end |
| Internal auditor removal at the Depository Centre | at least 30 days | advance notice, with reasons, to the Authority and to the internal auditor |
| New public joint-stock company | twelve months; two years | working capital period; listing adviser period, counted from listing |
| Converting company profit test | at least 10% of capital | net operating profit over the two financial years before conversion approval |
| Rights issue | 20 and 10 business days | minimum advance announcement before subscription; minimum rights trading period |
| Share buy-back for resale | 10% | maximum of issued and paid-up capital; none in the six months after the last public issuance |
| First category tests | 50% of capital; six months | accumulated losses at or above, or a suspension of six months or more, mean the second category |
| Watch list monitoring | one year, up to three years | by the joint committee the Authority sets up |
| Notice of a delisting decision | within 30 days | from the Authority's decision to delist |
| Conciliation decision | 15 working days | from receipt of a complete application |
| Corporate qualified investor tests | AED 75 million; AED 150 million; AED 7 million | total budget, net annual return, funds or paid-up capital; any two of the three |
| Individual qualified investor | AED 4 million; AED 1 million | net equity excluding the main home; annual income, plus knowledge or licensed representation |
| Minimum listing size for debt securities and Sukuk | AED 10 million | or an acceptable equivalent, unless the Authority decides otherwise |
| Voluntary cancellation of a debt listing | at least 90 days | written notice to holders, the Authority and the market |
| Crypto fundraising cap per client | AED 350,000 | where the offer is not restricted to qualified investors |
Places where the syllabus draws a line between two rules that sound alike. They are not predictions about any exam.
Three reporting periods sit close together in this chapter. The Depository Centre has 45 days after quarter-end for its quarterly report reviewed by the external auditor, and three months after its fiscal year-end for its audited annual report. A Sukuk obligor with a primary listing has 180 days after its year-end for its audited annual accounts. Fix the body and the report first, then recall the period.
In the troubled companies mechanism, a trading suspension of six months or more fails the first-category test, so exactly six months counts. For debt securities, the Authority's power to cancel a listing arises only once suspension lasts more than six months, and even then cancellation is a power the Authority may use, not an automatic result.
A buy-back for resale cannot take place in the six months after the company's last public issuance of securities. A fresh buy-back cannot start until a year has passed since the company last resold bought-back shares. A separate one-year period, counted from the Authority's approval, decides the earliest point at which bought-back shares can be resold. Check which event starts the clock before choosing a period.
A newly incorporated public joint-stock company needs enough working capital for twelve months. Its listing adviser supports compliance with the listing requirements for two years, and that period runs from the date of listing, not from the application. The two periods attach to different duties, so do not swap them.
AED 350,000 caps what any one client may put into a crypto fundraising that is not restricted to qualified investors. It does not limit trading on a crypto asset exchange, nor does it confer qualified investor status. AED 1 million is the yearly income threshold inside the individual qualified investor definition, which also needs AED 4 million of net equity excluding the main home.
When the Authority suspends the technology behind a crypto asset, holders' rights do not disappear. For security tokens it may require the related securities to be managed by alternative means. Returning subscription funds to investors is the measure for commodity tokens, not for securities.
The exam tests the rules in the study material for syllabus version 4.2. Where the law has changed since, Bourse Prep keeps the exam answer and notes the change separately. The regulator is the authority on current law. All regulatory updates explained.
The exam tests the 2020 SCA crypto asset rules, Decision No. 23/RM of 2020, and the current exam is still based on them, so answer with those rules. SCA replaced them in 2023 with Decision No. 26/RM of 2023 and Decision No. 27/RM of 2023, and in 2026 these gave way to the Capital Market Authority's Virtual Assets Framework, issued as Resolution No. 4 of 2026; in practice, which rules apply also turns on the asset, the activity and the place it is carried on.
Study tools for the rules in this chapter: side-by-side comparisons, decision paths and procedures. More are collected in Rules Lab.
| First category | Second category | |
|---|---|---|
| Starting point | Every listed company is placed here at the outset | Reached only when a first-category condition fails |
| Accumulated losses | Below 50% of capital | 50% of capital or more |
| Trading suspension | No suspension lasting six months or more | Suspended for six months or more |
| Trading | Normal trading | Trading continues on a dedicated screen showing relevant information |
| Moving between them | Losses are tested once a year on the audited annual accounts; a long suspension is a separate trigger | The market makes each transfer and announces it on its website |
A listed company wants to buy back its own shares with a view to reselling them later.
Each condition must be met in its own right; passing the numerical limits does not make up for a missing approval.
The learning objectives for this element, as the CISI UAE Financial Rules and Regulations syllabus, Version 4.2, effective 10 September 2023 lists them. Every question in our bank is mapped to one of them.
Bourse Prep holds 96 questions on this chapter, so work through it in blocks rather than one long set. Filter to Chapter 4 and take the depository, share and troubled company rules first, then debt, Islamic securities and derivatives, then crypto assets on their own. When you miss a question, read why each wrong option fails: wrong options often borrow a genuine figure from a neighbouring rule. Keep the numbers table to hand until each period comes with its body attached.
15 questions from all eight chapters. The answer is only revealed once you have committed to one.
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