Policy Statement 2/2012 Policy Statement on Appointment of Compliance Adviser
1. Pursuant to Rule 7.2.2 of the Markets Rules of the DFSA Rulebook (MKT), the DFSA has the discretion to require a
Reporting Entity to appoint a compliance adviser for a specified period to assist the Reporting Entity to comply with its continuing obligations under the Markets Law 2012 and the MKT.
2. This statement describes the view of the DFSA on matters relating to compliance advisers including
(a) the purpose of a compliance adviser;
(b) the kind of knowledge, experience, qualifications and resources a compliance adviser should have;
(c) the circumstances in which the DFSA is likely to exercise its discretion and require a
Reporting Entity to appoint a compliance adviser;
(d) the obligations of a
Reporting Entity regarding compliance advisers; and
(e) the manner in which a compliance adviser can assist a
Reporting Entity to meet its continuing obligations.
3. This statement applies to a
Reporting Entity that is required by the DFSA to appoint a compliance adviser under the MKT. A Reporting Entity is defined in Article 38 of the Markets Law 2012.
4. This statement will also be of interest to
Persons who act as compliance advisers to Reporting Entities. Compliance advisers do not have or take on any regulatory obligations of their own if they agree to act as compliance advisers to Reporting Entities.
5. When the DFSA decides that it is advisable for a
Reporting Entity to appoint a compliance adviser it will notify the Reporting Entity of its decision in writing. The DFSA anticipates that before directing a Reporting Entity to appoint a compliance adviser, it will discuss the proposed appointment with the Reporting Entity to ensure the appointment is appropriate and that the proposed compliance adviser has the requisite expertise and resources to act. The Reporting Entity will then be obliged to enter a contract for services with a person who has the appropriate expertise and resources to act as the Reporting Entity's compliance adviser.
6. The purpose of a compliance adviser is to assist a
Reporting Entity, which in the opinion of the DFSA, is unable, or may have difficulty, on its own, complying with its continuing obligations under the Markets Law 2012. Rather than prohibiting a Reporting Entity in these circumstances from participating in the DIFC capital markets, the DFSA may conclude that it is in the interests of the DIFC capital markets for the Reporting Entity to retain persons with the necessary expertise and resources to help the Reporting Entity meet its continuing obligations until it is able to do this on its own.
7. It is important to understand that the compliance adviser's role and duties are based on its contractual obligations to the
Reporting Entity and not on any regulatory obligations. A Reporting Entity does not, and cannot, avoid or diminish its regulatory obligations simply because it is required to have a compliance adviser. The responsibility for the Reporting Entity to comply with its continuing obligations remains the sole regulatory responsibility of the Reporting Entity. Thus, it is the Reporting Entity's obligation to:
(a) demonstrate that its compliance adviser has the appropriate knowledge, experience, qualifications and resources, including systems and controls, to fulfil its advisory role;
(b) give its compliance adviser unfettered access to the
Reporting Entity's senior management and governing body including access to relevant information concerning the operations of the Reporting Entity; and
(c) ensure its compliance adviser continues to fulfil its role until the DFSA advises the
Reporting Entity that the compliance adviser is no longer required.
8. A compliance adviser appointed by a
Reporting Entity should be a person who is fully familiar with the Markets Law 2012 and MKT and who has appropriate knowledge, experience, qualifications and resources to be able to assist and guide a Reporting Entity to comply with its continuing obligations.
9. The DFSA expects a compliance adviser to have a track record in providing advice on continuous disclosure, corporate governance, director's duties and other related matters to companies whose securities trade publicly in the DIFC or in jurisdictions whose regulatory and legal regimes are broadly comparable to the DIFC. The DFSA may require a compliance adviser to be domiciled in the DIFC.
10. A compliance adviser may be a specialist corporate finance advisory firm (i.e. investment bank) or a firm that provides legal, accounting or compliance services in the financial services field. The DFSA expects compliance advisers to be partnerships or corporations with significant financial services and compliance experience. The DFSA expects key employees of the compliance adviser to have professional training in accounting, finance, economics or law and at least 5 years relevant experience.
11. The DFSA will carefully consider the circumstances of each case before it decides to require a
Reporting Entity to appoint a compliance adviser. While it is difficult to predict all of the scenarios in which the DFSA would conclude that it is advisable and appropriate to require a Reporting Entity to appoint a compliance adviser, the DFSA would consider doing so where the DFSA is of the opinion that:
Reporting Entity is, or may be unable to or may have difficulty on its own in carrying out its continuing obligations unassisted; or
(b) there is a reasonable expectation that the proposed compliance adviser, if appointed, will be able to assist the
Reporting Entity to meet its continuing obligations.
12. The DFSA retains the discretion to direct a
Reporting Entity to appoint a compliance adviser in any other circumstances if it determines that it is appropriate to do so.
13. All of the obligations in MKT in dealing with compliance advisers fall on the
Reporting Entity. This is reflected in Rule 7.2.5 of MKT. Under this provision, it is the obligation of the Reporting Entity, who has been directed by the DFSA to appoint a compliance adviser to, amongst other things:
(a) take reasonable steps to ensure that the compliance adviser has the required, knowledge, experience, qualifications and resources to carry out its duties;
(b) take reasonable steps to ensure that the compliance adviser is independent and has managed conflicts of interest appropriately;
(c) provide any information about the compliance adviser if requested to do so by the DFSA;
(d) ensure the
Reporting Entity and its employees cooperate with the compliance adviser and do not interfere with the compliance adviser's ability to discharge its duties;
(e) take reasonable steps to rectify any failure brought to the
Reporting Entity's attention by the compliance adviser;
(f) take reasonable steps to ensure that the compliance adviser cooperates in any investigation conducted by the DFSA as provided by Rule 7.2.7 of MKT; and
(g) promptly advise the DFSA in writing when a compliance adviser resigns or is terminated including providing details of all relevant facts and circumstances.
14. To assist a
Reporting Entity to meet its continuing obligations, particularly those prescribed in MKT, a compliance adviser may consider it useful, amongst other things, to:
(a) accompany the
Reporting Entity to any meetings with the DFSA, unless otherwise requested by the DFSA; and
(b) discuss with the
(i). the disclosure of any Inside Information as required under MKT before such disclosure is made;
(ii). a submission of non-disclosure notification as required under MKT before such submission is made;
(iii). a transaction or event in MKT which may require disclosure before such event is contemplated;
(iv). any material deviation from any forecast, estimate or other information in the Prospectus or equivalent document or in the
Reporting Entity's annual report or financial statement
(v). any change to the intended use of proceeds of an Offer as outlined in the Prospectus or equivalent document before any such use by the
Reporting Entity's operating performance and financial condition by reference to the Reporting Entity's business objectives and use of issue proceeds as stated in its Prospectus or equivalent document;
Reporting Entity's compliance with the terms and conditions of any waivers granted from the Markets Law and MKT;
(viii). whether any profit forecast or estimate in the Prospectus or equivalent document will be or has been met by the
Reporting Entity and whether it is appropriate to notify the DFSA and make disclosure in a timely and appropriate manner;
(ix). compliance with any undertakings provided by the
Reporting Entity and its directors at the time of becoming a Reporting Entity and in the event of non-compliance, discuss the issue with the Reporting Entity's board of directors and make recommendations to the board regarding appropriate remedial steps; and
(x). information to be provided by the
Reporting Entity further to a DFSA request.
15. The above list is not mandatory or exhaustive, but merely a guide to highlight some of the continuing obligations of Reporting Entities and those for which compliance advisers will likely provide specific assistance.
Dubai Financial Services Authority