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Article (11) Minimum Capital Requirements

C 3/2023 Effective from 29/9/2023
11.1Aggregate capital funds consist of the following items:
a.Paid-up capital;
b.Reserves, excluding revaluation reserve; and
c.Retained earnings.
11.2The following items must be deducted from aggregate capital funds:
a.Accumulated losses; and
11.3The minimum required paid-up capital for a Finance Company is 150 million United Arab Emirates Dirham.
11.4In the event that Aggregate Capital Funds of a Finance Company fall below 150 million United Arab Emirates Dirham, the Finance Company must present a plan to rectify the shortfall to the Central Bank within 30 days of the occurrence of the shortfall. The plan must be approved by the board of directors of the Central Bank.
11.5U.A.E. national ownership of a Finance Company must comprise at least 60% of total paid-up capital.
11.6The amount of Aggregate Liabilities of a Finance Company must be limited to 100% of its Aggregate Capital Funds during the first two years of operation. Thereafter, approval may be sought from the Central Bank to allow the value of Aggregate Liabilities to increase to 200% of the Aggregate Capital Funds; up to 300% after four years; up to 500% after seven years; and up to 700% after ten years. A Finance Company may, for the purpose of this calculation, deduct from Aggregate Liabilities any of the following items:
a.Cash collaterals;
b.Bank guarantees from U.A.E. Banks; and
c.Sovereign guarantees.
 The items listed under the letters a, b and c of this Article must be legally enforceable.
11.7A Finance Company should allocate at least 10% of its annual net profits to the establishment of a statutory reserve until such point as that statutory reserve equals 50% of its paid-up capital.
11.8Shareholders of a Finance Company must not withdraw an amount exceeding their share of the annual net profit identified in the provisions of the Commercial Companies Law.
11.9A Finance Company must obtain approval from the Central Bank for any proposed dividend distribution and they must do so before announcing the proposed dividend publicly in a press announcement or by other means of communication and prior to submitting a proposal for a distribution of profits for shareholder approval.