Financial Crime World

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Acquisition and Control of Banks in the UAE

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Types of Banks

Banks in the UAE can take various forms, including:

  • Public joint-stock companies
  • Private joint-stock companies
  • Limited liability companies
  • Branches of foreign investment banks and financial institutions

Similarly, monetary and financial intermediaries may also be incorporated as:

  • Public joint-stock companies
  • Private joint-stock companies
  • Limited liability companies
  • Branches of foreign monetary and financial intermediaries

Insolvency Proceedings

Insolvency proceedings for banks are governed by the Companies Law and the Bankruptcy Code. When a bank becomes insolvent, the following steps must be taken:

  • A notice of liquidation must be published in the Official Gazette and at least two local daily newspapers.
  • Customers have at least three months to take necessary steps to enforce their rights after publication of the notice of liquidation.

Ownership Restrictions

Locally incorporated banks in the UAE are subject to certain ownership restrictions, including:

  • Majority ownership by UAE nationals or entities wholly owned by UAE nationals (at least 51% for companies outside free zones and at least 60% for finance companies).
  • Restricted foreign ownership, although there are branches of foreign banks operating in the UAE.

Regulatory Approvals

Any change in control of a bank requires prior written approval from the UAE Central Bank. The following steps must be taken:

  • Obtain approval from the Central Bank.
  • Receive subsequent approvals from emirate’s local licensing authorities.
  • Complete all regulatory requirements before proceeding with the acquisition.

Factors Considered by Authorities

When evaluating a change in control, the UAE authorities consider the following factors:

  • The identity of the acquirer
  • Its track record
  • Any conflicts of interest
  • The purpose and term of the investment

Filing Requirements

The required filings for an acquisition of control of a bank are not specified in this text. However, notifications to regulatory authorities may be necessary.

Timeframe for Approval

All approvals from the UAE Central Bank are at its discretion, and no approximate time frames can be stated. However, approval is typically obtained within several months.