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  • MKT 7 MKT 7 Sponsors and Compliance Advisers

    • MKT 7.1 MKT 7.1 Sponsors

      • Application

        • MKT 7.1.1

          This section applies to:

          (a) a sponsor appointed pursuant to Rule 7.1.2; and
          (b) any Reporting Entity that is required by the DFSA to appoint a sponsor.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • Appointment of Sponsors

        • MKT 7.1.2 MKT 7.1.2

          (1) Pursuant to Article 49(1) of the Law, the DFSA may, where it considers it appropriate to do so, require a Person who makes or intends to make a Prospectus Offer to:
          (a) appoint a sponsor in respect of the Prospectus Offer; or
          (b) provide third party certification in respect of any specific matters relating to the Prospectus Offer.
          (2) Where the DFSA requires a sponsor to be appointed pursuant to (1)(a), the DFSA must:
          (a) do so in sufficient time to enable the sponsor to comply with the requirements in this Part; and
          (b) require such appointment to be effective for the Offer Period or such other period as the DFSA determines as appropriate.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

          • MKT 7.1.2 Guidance

            1. The DFSA may require the appointment of a sponsor, or third party certification in respect of any matters relating to an Issuer, in appropriate cases. An example of circumstances in which the DFSA may require the appointment of a sponsor, or third party signoff, would be where an Issuer does not have a proven track record, such as a start-up.
            2. The DFSA will generally not require a SME to appoint a sponsor, as to do so is likely to be disproportionate given the nature, scale and resources of a SME. Instead, the DFSA will usually require a SME to appoint a compliance adviser under Article 49(1) of the Law and MKT Section 7.2, both when it applies for admission of its Shares to the List and on an ongoing basis once its Shares are admitted to the List.
            3. Generally, the matters in relation to which the DFSA may require third party sign-off pursuant to MKT Rule 7.1.2(1)(b) include matters relating to the adequacy of working capital and systems and controls in place for financial reporting by the Issuer. Such certification should be provided by a third party acceptable to the DFSA. To be acceptable to the DFSA, the third-party should be independent of the Issuer and have relevant expertise relating to the matters on which certification of compliance is to be provided.
            4. In most cases the Person making a Prospectus Offer will be the Issuer of the Securities to which the Prospectus relates. However there may be situations where the Person making a Prospectus Offer, that is the offeror, is not the Issuer of the relevant Securities.
            5. In any event, the sponsor must make certain inquiries and assume certain obligations under the Rules. A sponsor should therefore be a Person familiar with the requirements of the Law and Rules and who has the necessary knowledge, experience, qualifications and resources to assist the Person making the Prospectus Offer to comply with the various requirements.
            6. The DFSA's Policy Statement 1/2012 on Appointment of a Sponsor describes in greater detail the role and regulatory obligations of a sponsor and the kind of knowledge, experience, qualifications and resources the DFSA expects a sponsor to have. The Policy explains that although a sponsor has certain regulatory obligations of its own, as prescribed in this module, its principal role is to assist a Person making a Prospectus Offer to comply with its regulatory responsibilities relating to that offer. In the Policy Statement, the DFSA confirms that a Person making a Prospectus Offer does not, and cannot, avoid or diminish its regulatory obligations related to Offering Securities simply because it is required to have a sponsor. The regulatory obligations of the Person making the Prospectus Offer are not transferred to the sponsor but remain the responsibility of the Person making the offer.
            Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
            [Amended] DFSA RM120/2013 (Made 14th July 2013). [VER4/07-13]
            [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

      • Procedures Relating to Appointment of Sponsors

        • MKT 7.1.3

          (1) A Person required to appoint a sponsor must, prior to appointing a sponsor:
          (a) take reasonable steps to ensure that the proposed sponsor has the required knowledge, experience, qualifications and resources to carry out its obligations under the Rules; and
          (b) notify the DFSA of the proposed sponsor's name, its business address and an address in the DIFC for the service of documents.
          (2) If requested by the DFSA, a Person appointing a sponsor must provide the DFSA with information about the knowledge, experience, qualifications and resources of the appointed or proposed sponsor.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 7.1.4

          (1) A Person must take reasonable steps to ensure that the relevant sponsor and Employees of the sponsor are independent and have appropriately managed any conflict of interest that may arise.
          (2) A Person must notify the DFSA if it becomes aware, or has reason to believe, that the sponsor or relevant Employees of the sponsor are no longer independent or have a conflict of interest which has not been appropriately managed.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 7.1.5 MKT 7.1.5

          (1) Where, in the opinion of the DFSA, a sponsor appointed by a Person is not suitable, or where a sponsor has not been appointed or has resigned, the DFSA may direct the Person to replace or appoint a sponsor.
          (2) The procedures in Schedule 3 to the Regulatory Law apply to a decision of the DFSA under this Rule. The DFSA must give both the Person and, if in the DFSA's opinion a sponsor is not suitable, the sponsor an opportunity to make representations under the procedures in that Schedule.
          (3) If the DFSA decides to exercise its power under this Rule, the Person may refer the matter to the FMT for review.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RM134/2014 (Made 21st August 2014). [VER5/06-14]

          • [Deleted]

            [Deleted] DFSA RM134/2014 (Made 21st August 2014). [VER5/06-14]

      • Obligations of a Sponsor

        • MKT 7.1.6

          A sponsor appointed pursuant to Rule 7.1.2 must:

          (a) satisfy itself to the best of its knowledge and belief, having made due and careful enquiry that the Person who makes or intends to make a Prospectus Offer has satisfied all applicable conditions for offering Securities and other relevant requirements under the Law and the Rules;
          (b) provide to the DFSA any information or explanation known to it in such form and within such time limit as the DFSA may reasonably require for the purpose of verifying whether the Person making the Prospectus Offer complies or has complied, with the applicable requirements in the Law and the Rules; and
          (c) take other steps required in writing by the DFSA.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 7.1.7

          Where a sponsor becomes aware of a failure by the Person making the Prospectus Offer to comply with its obligations under the Law and the Rules, the sponsor must without undue delay:

          (a) notify the Person making the Prospectus Offer of the failure and take reasonable steps to ensure it rectifies the failure within a reasonable time; and
          (b) if the Person making the Prospectus Offer does not or is unable to rectify the failure as soon as practicable notify the DFSA of that fact.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • Duty of Care of Sponsors

        • MKT 7.1.8

          A sponsor has a duty of care to the Person which has made its appointment.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • Co-operation with Sponsors

        • MKT 7.1.9

          A Person who is required to appoint a sponsor in respect of a Prospectus Offer must take reasonable steps to ensure that it and its Employees:

          (a) provide such assistance as the sponsor reasonably requires to discharge its duties;
          (b) give the sponsor right of access at all reasonable times to relevant records and information;
          (c) do not interfere with the sponsor's ability to discharge its duties;
          (d) do not provide misleading or deceptive information to the sponsor; and
          (e) report to the sponsor any matter which may significantly affect the financial position of the Person issuing the Securities or the price or value of the Securities.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 7.1.10

          A sponsor must notify the DFSA of any non co-operation by the Person making the Prospectus Offer or the Employees of that Person.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • Termination of Appointment

        • MKT 7.1.11

          Where a Person who is required to appoint a sponsor dismisses the sponsor, the Person must advise the DFSA in writing without delay of the dismissal, giving details of any relevant facts and circumstances.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 7.1.12

          Where a sponsor resigns, it must advise the DFSA in writing without delay of the resignation, giving details of any relevant facts and circumstances.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

    • MKT 7.2 MKT 7.2 Compliance Advisers

      • Application

        • MKT 7.2.1 MKT 7.2.1

          This section applies to a Person who is required by the DFSA to appoint a compliance adviser.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

          • MKT 7.2.1 Guidance

            1. The requirement for the appointment of a compliance adviser is designed to ensure that the Person appointing that adviser is aware of and complies with its obligations under the Law and this module. A compliance adviser should therefore be a person familiar with the requirements of the Law and this module and should have the necessary knowledge, experience, qualifications and resources to assist a Person required to appoint such an adviser to comply with its regulatory obligations.
            2. The DFSA's Policy Statement 2/2012 on Appointment of Compliance Adviser describes in greater detail the purpose of a compliance adviser and the circumstances in which the DFSA is likely to require a Reporting Entity to appoint a compliance adviser. The Policy also describes how a compliance adviser can assist a Reporting Entity to meet its obligations in the Law and this module generally, and specifically the continuing obligations prescribed in this section. The Policy explains that the compliance adviser does not take on any regulatory obligations or potential regulatory liability of its own under the Law or this module if it agrees to act as a compliance adviser to a Reporting Entity. The relationship between the Reporting Entity and compliance adviser is a contractual one similar to one with any other professional adviser. In the Policy Statement the DFSA confirms its view that the compliance adviser role is merely to advise and assist the Reporting Entity to comply with its continuing regulatory responsibilities, all of which remain the responsibility of the Reporting Entity.
            3. The DFSA will also usually require a SME applying for admission of its Shares to the List to appoint a compliance adviser as a condition of that admission and its ongoing listing. The DFSA will expect the compliance advisor to have sufficient senior, competent staff and a proven track record of relevant corporate finance transaction experience to enable it to advise the SME properly about the listing process and its ongoing obligations as a Reporting Entity.
            Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
            [Amended] DFSA RM120/2013 (Made 14th July 2013). [VER4/07-13]
            [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

      • Appointment of a Compliance Adviser

        • MKT 7.2.2

          The DFSA may, pursuant to Article 49(1) of the Law, require a Person to:

          (a) appoint a compliance adviser; or
          (b) replace a compliance adviser al appointed.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

        • MKT 7.2.3

          (1) A Person required to appoint a compliance adviser must, prior to making the appointment:
          (a) take reasonable steps to ensure that the proposed compliance adviser has the required knowledge, experience, qualifications and resources to carry out its obligations under the Rules;
          (b) notify the DFSA of the proposed compliance adviser's name and business address; and
          (c) take reasonable steps to ensure that the proposed compliance adviser and its relevant Employees are independent and that any conflicts of interest are appropriately managed.
          (2) If requested by the DFSA, a Person appointing a compliance adviser must provide the DFSA with such information as it may require including information regarding knowledge, experience, qualifications and resources of the compliance adviser.
          (3) A Person required to appoint a compliance adviser must notify the DFSA if it becomes aware, or has reason to believe, that the compliance adviser or its relevant Employees have a conflict of interest which has not been appropriately managed.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

      • Compliance adviser appointed to assist a SME

        • MKT 7.2.3A MKT 7.2.3A

          The DFSA may, by written notice, require a SME to appoint a compliance adviser to assist the SME in meeting its obligations under the Law and the Rules, both when it applies for admission of its Shares to the List and on an ongoing basis when its Shares have been admitted to the List.

          Derived from RMI273/2020 (Made 26th February 2020). [VER16/04-20]

          • MKT 7.2.3A Guidance

            Where a SME is required to appoint a compliance adviser on an ongoing basis under MKT Rule 7.2.3A, it must ensure that the compliance adviser continues to perform that role unless the SME receives written notice from the DFSA that the requirement is withdrawn. The DFSA will generally not withdraw such a requirement unless the SME can demonstrate to the DFSA’s satisfaction that:
            (a) the SME’s Shares have been admitted to trading on an Authorised Market Institution for at least three years;
            (b) the ongoing obligations for trading on that Authorised Market Institution have been complied with during that period; and
            (c) the SME has sufficient resources in place to comply with its obligations under the Law and the Rules without the assistance of a compliance adviser.
            Derived from RMI273/2020 (Made 26th February 2020). [VER16/04-20]

      • Compliance adviser appointed to assist for a specified period

        • MKT 7.2.4 MKT 7.2.4

          (1) The DFSA may, by written notice, require a Reporting Entity to appoint a compliance adviser for a specified period to assist the Reporting Entity in meeting its continuing obligations under the Law and the Rules.
          (2) A Reporting Entity that is required to appoint a compliance adviser in accordance with the requirements in this section must ensure that a compliance adviser continues to fulfil the role of compliance adviser until such time as the DFSA advises the Reporting Entity in writing that a compliance adviser is no longer required.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

          • [Deleted]

            [Deleted] DFSA RM134/2014 (Made 21st August 2014). [VER5/06-14]

      • Obligations of a Reporting Entity in Relation to its Compliance Adviser

        • MKT 7.2.5

          Where a Person required to appoint a compliance adviser is advised by its compliance adviser that it is failing or has failed to comply with its obligations under the Law and the Rules, the Person must without undue delay:

          (a) take reasonable steps to rectify the failure as soon as practicable; and
          (b) if the Person does not or is unable to rectify the failure as soon as practicable notify the DFSA of that fact.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

        • MKT 7.2.6

          A Person required to appoint a compliance adviser must provide to the DFSA any information in such form and within such time as the DFSA may reasonably require regarding its compliance adviser or any advice the compliance adviser is providing, or has provided, to the Person regarding its continuing obligations under the Law and the Rules.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

        • MKT 7.2.7

          A Person required to appoint a compliance adviser must take reasonable steps to ensure its compliance adviser cooperates in any investigation conducted by the DFSA including answering promptly and openly any questions addressed to the compliance adviser, promptly producing the originals or copies of any relevant documents and attending before any meeting or hearing at which the compliance adviser is requested to appear.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

      • Co-operation with Compliance Advisers

        • MKT 7.2.8

          A Person required to appoint a compliance adviser must take reasonable steps to ensure that it and its Employees:

          (a) provide such assistance as the compliance adviser reasonably requires to discharge its duties;
          (b) give the compliance adviser right of access at all reasonable times to relevant records and information;
          (c) do not hinder or interfere with the compliance adviser's ability to discharge its duties;
          (d) do not withhold information that would assist the compliance adviser advising the Person of its duties;
          (e) do not provide misleading or deceptive information to the compliance adviser; and
          (f) report to the compliance adviser any matter which may significantly affect the financial position of the Person or the price or value of the Securities.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

      • Termination of Compliance Adviser

        • MKT 7.2.9

          Where a Person dismisses its compliance adviser, the Person must advise the DFSA in writing without delay of the dismissal, giving details of all relevant facts and circumstances.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]

        • MKT 7.2.10

          Where a compliance adviser resigns, the Person must without delay advise the DFSA in writing of the resignation, giving details of all relevant facts and circumstances.

          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RMI273/2020 (Made 26th February 2020). [VER16/04-20]