ABU DHABI -- As part of its mission to introduce credit rating regulations that ensure a well-developed, investment-conducive and resilient financial system, the Securities and Commodities Authorities, SCA, has decided that no licenses shall be granted to potential credit rating entities unless the applying party has a minimum of AED2 million in capital.
This has been announced by the SCA in a draft resolution on the practices and workings of credit rating entities in the United Arab Emirates before being officially announced by the SCA Board of Directors shortly.
The draft resolution includes four chapters consisting of 17 articles. Chapter I addresses rules and regulations of licensing an entity to perform credit rating activities in the country, while Chapter II tackles the general obligations of a credit rating entity, with Chapter III covering the commitments related to credit rating activities and Chapter IV centering on surveillance and penalties.
According to the draft resolution,a potential entity must have, inter alia, a minimum of AED2 million in capital to get licensed for credit rating operations in addition to a prior consent by the UAE Central Bank or the Insurance Authority should the license applicant be subject to their mandate.
In areas of surveillance and inspection, the draft resolution states that SCA, as part of its mission to ensure control of market workings, is invested the right to take all measures necessary for assuring that credit rating agencies operating in the country abide by the governing laws and regulations of SCA as well its resolutions, circulars and all others terms and conditions issued by it.
Credit ratings have the potential to be an extremely powerful tool in channelling funds for UAE-based businesses. A rated entity will have ease of access to external funding, notably from capital markets and thus lowering the reliance on financial intermediaries.
Source: Emirates News Agency