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Article (7): Principal Business and Financial Resources Requirements

C 6/2020 Effective from 30/10/2020
  1. The principal business of a licensee must be the issuance of SVF under a License.
     
  2. The principal business and financial resources requirements set out in this Article do not apply to licensed banks that carry out the SVF business in the State.

Principal business requirement

  1. For the avoidance of doubt, a Licensee is not permitted to carry on any other Licensed Financial Activity without obtaining a License from the relevant authority. If the Licensee wishes to conduct any secondary or ancillary businesses, the Licensee must seek approval from the Central Bank before undertaking such activity.

Financial resources requirements

  1. A Licensee must maintain the following:
     
    1. 4.1. paid-up capital of at least 15 million Dirham (15,000,000 AED) or an equivalent amount in any other currency approved by the Central Bank;
       
    2. 4.2. Aggregate Capital Funds must be at least 5% of the total Float received from the Customers.
       
  2. The Aggregate Capital Funds consist of the following items:
     
    1. 5.1. Paid-up capital;
       
    2. 5.2. Reserves, excluding revaluation reserves; and
       
    3. 5.3. Retained earnings.
       
  3. The following items must be deducted from Aggregate Capital Funds:
     
    1. 6.1. Accumulated losses; and
       
    2. 6.2. Goodwill.
       
  4. A Licensee must be able to demonstrate that its financial resources are sufficient for implementing its business model in a safe, efficient and sustainable manner, without compromising the interests of Customers.
     
  5. A Licensee must provide adequate details to the Central Bank on the source of funds that will be used to support the proposed business activities.
     
  6. A Licensee must demonstrate that it will be able to maintain sufficient financial resources to facilitate an orderly wind-down of its SVF business, including a smooth refunding process.
     
  7. The Central Bank may impose a higher financial resources requirement if, taking into account the scale and complexity of a Licensee’s business, it considers such a requirement important in ensuring that the Licensee concerned has the ability to fulfil its regulatory obligations under this Regulation. An unconditional irrevocable bank guarantee for the full paid up capital amount in favor of the Central Bank paid upon first demand shall also be submitted to the Central Bank with the application of the License. Such a guarantee should be renewable before expiry or based on the Central Bank’s demand.