In view of enquiries made by some banks operating in the country regarding the acceptance of public subscription to the capital of new companies or to an increase in the capital of existing companies, we would like to advise that we have decided to make some amendments and additions to our circulars Nos. 40 and 429 dated 14.5.81 and 22.3.87 respectively, and to consolidate them into one circular which would read as follows:-

1. 1) All licenced banks (including Representative Offices) operating in the UAE must obtain prior approval of the Central Bank (Banking Supervision Department) before accepting any public subscription to the capital of new companies or to any increase in the capital of existing companies, whether these companies are established in the UAE or abroad.
    
2. 2) Approval must be requested whether banks act as underwriters or intermediaries to the issue. Banks are regarded as intermediaries if they advertise in any way for share issue and/or collect customers’ application forms. They are not regarded as intermediaries and have not to ask for any authorisation if they are only involved in transferring money at the request of customers, without advertising in any way for the issue and without collecting application forms.
    
3. 3) Applications submitted to the Central Bank must include the following:-
    
   1. (a) Banks must certify that the share issue in question is made in compliance with the rules and regulations of the country where the company is incorporated and that they are entitled to collect funds in this regard.
       
   2. (b) Banks must provide the Central Bank with a copy of all terms and conditions of the share issue: share value, period of issue, date of allotment, date of delivery of share certificates, deadlines for refund in case shares are over-subscribed, etc.
       
   3. (c) Banks must confirm in writing that they will be responsible to protect the interest of subscribers and are prepared to take the necessary steps, in due time, to enable their customers to fully obtain what they are entited to:
       
      1. — refund, in case payment is made in advance and shares are over-subscribed;
          
      2. — confirmation from the issuing companystating the number of shares allotted to the customer, in case payment is made in instalment;
          
      3. — delivery of the share certificate, in due time.
          
4. 4) Banks should bring to the knowledge of customers any information that may be useful for making a decision upon the offer, especially the following:-
    
   1. (a) In case the offer is advertised in the press, summary of latest audited accounts of the issuing company should be published.
       
   2. (b) Date when allotment of shares is to be made and deadline for refund, in case subscription is paid in advance and shares are over-subscribed, must be clearly indicated to the applicant.
       
   3. (c) It must also be stated whether interest is to be paid or not to the applicant in case refund is not made by the above mentioned deadline.
       
   4. (d) Applicant must also be clearly informed in case loss or gain on foreign exchange is to be borne by him.
       

   Banks should make sure that applicants have acknowledged that they are aware and have accepted the terms and conditions of such subscription.

5. 5) Banks should issue acknowledgement to the subscribers for the application ledged with them, stating the name and address of the issuing company, the number of shares subscribed, amounts paid in advance, date of delivery of share certificates, date of delivery of receipt from the issuing company in case payment is made in instalments, and deadline for refund in case shares are over-subscribed.
    
6. 6) In case of locally incorporated companies banks are required to verify that founder members have already paid for their shares in one of the banks operating in the country before they accept public subscriptions.
    
7. 7) Whee relevant, banks are required to open special account(s) for the collection of subscriptions after receiving Central Bank approval. The amounts deposited in such account(s) are subject to reserve requirement in case they are kept for a period of more than one month.

                                                                                                                                    Yours faithfully,